Power firms in Nigeria have called for the reduction of domestic gas price for power generation to avoid worsening the existing N1.5 trillion electricity market shortfall which they said is affecting stable electricity supply in the country.
The Association of Nigerian Electricity Distributors (ANED), the umbrella body of distribution companies, made the call in Abuja, on Saturday.
ANED’s spokesman, Barr. Sunday Oduntan, in a statement, said gas price accounts for 70 percent of the inputs by gas-fired Generation Companies (GenCos) which affects the cost of electricity.
He said, “The absence of a market-reflective tariff has continued to bedevil the sector and is presently responsible for most of the N1.5 trillion liquidity gap.
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“With effect from July 1, a new performance driven increased tariff structure is set for implementation to narrow the liquidity gap.
“If the cost of the major input in any production process is reduced, it will have a ripple effect across the entire chain.”
Energy generation mix is around 80 percent for gas-fired GenCos and 20 percent for hydropower GenCos. The price of gas is about $3.80 per million British Thermal Units (mmbtu).
However, electricity consumers pay their bills in Naira to the DisCos who in turn pay for energy to the GenCos while the GenCos are obligated to pay for the gas in US dollars.
“Except we begin to consider solutions from that angle, we may not make much headway in providing the cheap electricity Nigerians need to move the country to an industrial giant,” Oduntan said.
