Fashola spending $5.6m to generate 1mw of electricity instead of $1.5m – ANED

ANED said this in a statement on Sunday in response to Fashola’s accusation that the body was not known to the government and its spokesperson, Sunday Oduntan, was an interloper.

The Association of Nigerian Electricity Distributors has accused the Minister of Power, Works and Housing of spending $5.6 million to generate 1megawatt of electricity instead of $1.5 million proposed by power developers from the private sector.
ANED said this in a statement on Sunday in response to Fashola’s accusation that the body was not known to the government and its spokesperson, Sunday Oduntan, was an interloper.
Fashola had in a reaction to ANED on his initial press briefing giving directives to the Nigerian Electricity Regulatory Commission, Bureau of Public Enterprises and Nigeria Bulk Electricity Trading Plc on the issue of power generation and metering, written a personally signed statement in which he lambasted the power distribution companies.
In its response to the Minister on Sunday, ANED said Fashola was generating electricity through the Rural Electrification Agency at a higher cost than proposed.
It said even the $1.5 million proposed by the private sector electricity generators was described as too high by Fashola, only for $5.6 million to now be spent.
ANED said Nigerians were not getting value for taxpayers’ funds being channelled to misguided projects by the REA, Transmission Company of Nigeria and “friends” under the watch of the minister.
It said REA was currently implementing a three-megawatt power project valued at N5.2 billion or $5.6 million per megawatt in Sokoto and another two-megawatt plant in Anambra State valued at N4.04 billion or $2.02 million per megawatt from taxpayers’ funds.
ANED said: “Why is this remarkable? It is remarkable because the government has robustly challenged, as exorbitant, the proposed price of $1.5m/MW put forward by power developers from the private sector and sought a reduction of same.
“Are Nigerians truly best served by the various ‘projects’ being promoted by REA, TCN and friends? Are taxpayers truly getting value for money with these projects? Should the unserved rural dwellers, who should be legitimate beneficiaries of REA’s funding and services, continue to live in darkness due to the ministry’s and REA’s misguided priorities?”
The Discos further argued that REA was going outside its mandate as it had left rural electrification and was currently spending taxpayers’ funds on the urban areas.
They added: “Should the TCN, an entity without a distribution licence, continue to engage in opaque ‘Eligible Customer’ transactions, rather than investing its limited funding in expanding and stabilising the grid, for increased energy to our customers, given its status as the weakest link in the Nigerian electricity supply industry value chain?
“We believe that Nigerian taxpayers should legitimately be asking, ‘With 65 per cent of rural dwellers not connected to electricity, are the interests of these unserved dwellers best served by REA expending budgeted, borrowed and donor funding in urban areas that are explicitly outside of its statutory mandate?”
ANED also stated that power distributors were losing an average of N48 per kilowatt hour of electricity as a result of the non-review of tariff since February 2016, a period of about 30 months.
It added that the suspension of the tariff review process, which ought to be done every six months by NERC under the Federal Minister of Power, Works and Housing, had added to performance issues in a capital intensive power sector.
ANED said: “Through the regulatory and policy actions that have been principally driven by the minister, the Discos have been forced to sell their product, which should retail for an average retail tariff that is more than N80/kWh, at an average retail price of N32/kWh.
“While we acknowledge and are sympathetic to the government’s challenge of maintaining the balance between the myriad of its obligations and its fiscal constraint, continued failure to address this pricing gap means that we will only arrive at, and continue to exist in our current situation of N1.3tn of market shortfall and growing, and absence of the pricing signal that will grow electricity supply along the value chain.”
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