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Compelling MDAs, others to pay arrears of bills better than N701bn intervention—ANED

The leadership of the Association of Nigerian Electricity Distributors (ANED), an advocacy group has viewed the recent N701bn intervention fund floated by the federal government as dangerous bait even though it will go a long way in funding repairs, expansion and infrastructures.

Analysts say the fund would solve N300 billion energy supply liabilities, rehabilitate and replace faulty or old turbines and pay for the supply of gas (for the thermal generating plants), it is merely a partial solution to the liquidity challenges of the sector.

In an interview, the Executive Director of ANED, Sunday Oduntan said the fund “holds the potential for exacerbating the revenue shortfalls the market is currently suffering.”

He described the intervention as “a partial solution to the liquidity challenges of the sector, more so as it holds the potential for exacerbating the revenue shortfalls the market is currently suffering from”.

“While an increase in electricity supply is the desired objective of everyone, such an increase without the requisite full recovery of cost via the appropriate pricing of power means worsening of the market revenue gap.”

He warned that the approved intervention is not expected to be a subsidy to the market; the assumption is that the proposed funding would eventually be recovered from the customers of electricity Distribution Companies (Discos).

To him, for such recovery to occur, the Transmission Company of Nigeria (TCN) needs to have the required capacity to wheel the additional power being generated.

ANED boss argued that “Funding the transmission network is therefore imperative for the proposed Federal Government intervention to work.  Increased generation without commensurate wheeling capacity arising from a stable and robust transmission grid will result in stranded capacity and significant lost revenues.”