ELECTRICITY Distribution Companies (DisCos) have appealed to the Federal Government to intervene in gas pricing for power generation to ensure effective service delivery.
The Executive Director Research and Advocacy, Association of Nigerian Electricity Distributors (ANED), Mr Sunday Oduntan, made the call in a statement in Abuja on Saturday.
He said that the cost of gas is a key determinant of the electricity tariff in Nigeria and called on government to help bring down the price in the interest of the sustainability of the power sector.
According to Oduntan, most of the power generating plants in the country are thermal, and use gas as their fuel and “the cost of gas presently accounts for almost 70 per cent of all the input the plants utilise to generate power.”
He explains that, “as long as the price of gas is high, the cost of generation, and the eventual tariff to the end user, will be high.
“At present, the energy generation mix is around 80 per cent thermal and 20 per cent hydro.
“The cost of gas is also affected by fluctuations in foreign exchange. While the cost of gas and generation will rise due to foreign exchange fluctuations, the tariff is fixed in local currency and may not account for this difference.”
Oduntan said that presently, some International Gas Companies (IGCs) were still flaring gas, and that there were options available to the government to make electricity more affordable.
Oduntan noted that the absence of a tariff that reflects the reality in the market had continued to bedevil the sector and contributed to much of the N1.5 trillion liquidity gap in the sector.
He said that with effect from July 1, a new tariff structure would be implemented and “if the cost of the major input in any production process is reduced, it will have a ripple effect across the entire chain.”