Chief Executive Officer of PowerCap Limited, Mr. Abiodun Ogunleye, has predicted that users may have to pay as much as N10,000 to get 100 units of electricity if the cost ultimately increases, which has been causing widespread concerns amongst people as the expected 40 percent hike in electricity pricing continues to be debated. The projection was made during a news conference in Lagos announcing the 2023 PowerSolution Conference, which would be held on July 19 and 20, 2023, in Lagos, featuring the theme: “Sustainable Resolution of the Gaps in the Power Sector.”
According to Ogunleye, who has been in the industry for more than 30 years, increases in inflation and foreign exchange inevitably lead to higher electricity rates in the power sector as a whole. He pointed out that back in President Goodluck Jonathan’s administration, one could get 100 units of energy for about N1,500 or N1,600. At the end of President Muhammadu Buhari’s administration, he indicated that the cost of purchasing 100 units of energy was somewhere in the range of N6,000 to N7,000. Based on these numbers, 100 units will be approximately N10,000.
Compared to before, Disco makes lesser money now due to the surge.
The foreign exchange component is responsible for the vast majority of the industry’s activity. The gas providers are examining the global gas market in order to decide whether they will provide gas to the generating companies in order for them to make power locally or if they will sell their gas to anyone on the global market. Also, the electricity-generating machine that is going to be put into service in Egypt will be the same one that will be put into use in Lagos or any of the other load sites in Nigeria.
More so, he reasoned, the next logical inquiry would be to learn the state of the currency exchange since Jonathan’s resumes and where we are. Ogunleye said that several Discos had been reclaimed by the government since it was possible that the companies and their investors were losing money while customers were unaware. He insisted that it would be obvious that power distributors were not earning as much money as they were earlier if inflation and tariff increments were removed and the net income of Discos was reset to its pre-increase levels.
Foreign exchange and other factors are impeding the sector.
He elaborated, saying the country’s exchange rate has risen from around N200/$ to almost N400/$. Currently, one dollar costs around N700. So he advocated for better terms for the Discos. A reasonable tariff definition is also necessary. Let markets decide everything. He is relieved that the new president has promised to examine wages, which will come with an inflation impact. However, this strategy is preferable to restricting development in any industry or declaring that the government would begin subsidising the electrical industry due to the large number of people who use it. That’s a riskier way to go about the plans.
Therefore, the Discos seem to be a victim of the whole economic system. Discos have a bad reputation among customers for charging excessive cover fees. However, it is possible to estimate how much more expensive supplies were under President Goodluck and how much more they would cost after new tariffs were implemented. He added that maybe they should switch the subsidies from gas to electricity instead. They should stick with the no-subsidy policy.
Upcoming event is expected to address the industry challenges.
Lastly, he announced an upcoming conference at which experts will analyse the Electricity Act of 2023, discussing its prospects and problems and outlining their consequences for the federal and state governments. According to Ogunleye, the two-day conference will cover a wide range of issues related to the power industry. Some of the topics that will be covered include; Right Operating Environment: State Governments and Creation of New Markets; Transmission and Distribution: Maintaining Network Infrastructure to Enhance Sustainable Grid; Power Generation: Making More Capacity Available.