New concerns about inefficiencies in the energy sector, aging infrastructure - Guardian Nigeria

New concerns about inefficiencies in the energy sector, aging infrastructure – Guardian Nigeria

Eight years after the privatization of Nigeria’s electricity sector, system deficiencies, particularly high aggregate, technical and commercial (ATC&C) losses, aging infrastructure, poor customer relationship management, and a history of cost-reflective low tariffs continue to sour the growth of the country. sector.

This is according to a new report highlighted in a quarterly report published by Nextier on the Nigerian electricity supply industry.

The report, obtained in an EmPower publication, has fingered Distribution Companies (DisCos) at challenges affecting the progressability of Nigeria’s electricity industry.

Highlighting strategic and operational challenges in the Nigerian Electricity Supply Industry (NESI) and providing solutions, the report noted that the Nigerian Electricity Supply Industry is facing a funding challenge, adding that the capital structure of acquisitions, debt and financing expansion is challenging for the infrastructure assets that operate in an organized facility.

The sector has faced challenges, as it has increased the required long-term patient capital that is aligned with long-term infrastructure assets. As a result, the challenge for companies has been to service debt, meet the necessary rehabilitation and expansion commitments, and improve efficiencies, while at the same time paying their upfront bills to other market participants and management bodies.”

It missed the loopholes of the multi-year tariff order (MYTO), a methodology for regulating rates and rewarding the performance of industry operators. Disclosing that while semi-annual secondary reviews take into account changes in standards that affect tariffs, factors such as gas availability, water management, and transportation infrastructure capabilities constrain actual generation.

The report stated that although some upstream expenses were not incurred due to unavailability of power supply, system constraints still resulted in lost revenue and profits.

“Ideally, DisCo’s operational planning and budgeting should provide adequate capital and operating expenditures (CapEx and OpEx) to expand, upgrade, strengthen and maintain the available equipment.

These activities are vital to meet the changing and growing demand for distribution companies. Unfortunately, due to insufficient funding and high collection losses, most of them were unable to invest in the amount of infrastructure needed to make physical and lasting improvements. As a result, poor operational planning and execution exacerbate ATC&C losses and customer frustration.”

He called for improving performance and improving customer service delivery, especially since the federal government has taken steps to remove the historical shortage of tariffs to enable companies to raise the capital needed to improve infrastructure and performance.

According to the report, the implementation of the capex expansions, which were absorbed by MYTO Performance Improvement Plans (PIPs) after the extraordinary review, needed urgent reviews to maintain industry viability after extensive changes in industry standards.

According to the report, inconsistent data availability and quality will affect improvements in the electricity industry and the regulator’s ability to monitor performance and compliance.

“It is therefore imperative that NERC design and implement a coordinated effort to ensure that information systems communicate with each DisCo to enable real-time receipt of information on DisCo performance.

“A comprehensive approach to resolving issues in the sector is required if NESI is to realize its potential. Moreover, solving the problems facing Diskus will help facilitate a more competitive electricity market.


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