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Discos Intensify Efforts For Electricity Tariffs Hike Approval

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There is no respite yet for electricity consumers with Distribution Companies (DisCos) still pushing ahead with their bid for Federal Government’s approval to raise the tariffs.

Last week, the National Electricity Regulatory Commission (NERC) halted the 40 per cent tariff hike planned by the DisCos following an outcry by Nigerians, who are reeling under the effect of petrol subsidy withdrawal.

NERC’s action came after some of the DisCos notified consumers of increased tariffs.

It was learnt yesterday that the DisCos are billed to meet with NERC in Abuja next week.

Senior officials of two DisCos, who confirmed the scheduled meeting, declined to release the agenda.

But it was learnt that tariffs raise is central to the parley.

The NERC will also meet with other power institutions such as the Transmission Company of Nigeria (TCN) and Generating Companies (GenCos).

It was learnt that NERC has scheduled a meeting with all the 11 DisCos and other critical stakeholders in the electricity supply and loop.

The Nation exclusively gathered that the meeting will hold between Monday and Friday.

NERC will meet on Monday and Tuesday with Managing Directors and top management of DisCos, GenCos and TCN.

On Wednesday and Thursday, it will meet with major electricity consumers, firms, suppliers and service providers, such as suppliers of gas, among others.

How the DisCos can shore up their revenue, especially following a 40 per cent loss, and their inability to meet their performance targets, will also be discussed, it was gathered.

All the DisCos, based on the NERC’s June 2023 data, recorded losses after exceeding their allowed targets for Aggregate Technical, Commercial, and Collection (ATC & C) losses.

The ATC & C losses include technical, commercial and collection inefficiencies in the power distribution process, such as power theft, meter tampering, billing inaccuracies and revenue leakages.

The failure to meet the target comes at a time when the sector was considering an increase in electricity tariffs brought about by macroeconomic conditions.

Sources close to the top management of DisCos that will be attending the meeting confided in The Nation that the issue of tariffs increase will be knotty, but they are ready to really push for its approval.

It was gathered that another option to be mooted will be to have a gradual increment instead of the 40 per cent tariffs increase at once.

This means that the DisCos may settle for increments on pro-rata basis until they finally get to the desired target of 40 per cent.

However, should the proposal be rejected, the DisCos may ask the government for a subsidy in the form of a “relief package” on their equipment importation and other critical operational transactions executed in foreign exchange, especially with the exchange rate unification.

But this may be a difficult option given that in March 2022, the former Minister of Finance, Zainab Ahmed, revealed that the government had ‘quietly’ removed the subsidy on electricity tariff or any buffers it was paying in the sector.

“We have been able to quietly implement subsidy removal in the electricity sector and as we speak, we don’t have subsidies in the electricity sector.

“We did that incrementally over time by carefully adjusting the prices at some levels while holding the lower levels down,” she said at a virtual meeting of African Finance Ministers (AFM) and the International Monetary Fund (IMF) back then.

DisCos have insisted that without increasing tariffs, their continued survival in business will be threatened.

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Job Losses, Factory Closures Loom As Unsold Goods Pile Up — MAN

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AGAINST the backdrop of sustained pressure in the foreign exchange market and high cost of production, the Manufacturers Association of Nigeria, MAN has indicated that inventory of unsold goods is escalating to levels now threatening the existence of companies operating in the production sector of the economy with attendant job losses.

Findings show that as of the weekend the foreign exchange market had recorded over 254 per cent plunge in the value of the naira since flotation of the currency by the Central Bank of Nigeria (CBN) in June 2023.

Recall that the naira traded for N471 per dollar in the official I&E market on June 13, 2023 before the floatation of the currency, but exchanged for N1,665.50 to a dollar as at February 23, 2024 on the Nigerian Foreign Exchange Market (NAFEM), indicating a depreciation of more than 253.6 per cent over the eight-month period. The forex crisis is also stoking inflation, and coupled with high energy costs, purchasing power has continued plummet, stifling demand for goods.

Speaking on the impact of this development on the manufacturing sector, Director General, MAN, Segun Ajayi-Kadir, said: “There are reports that across the board, many warehouses and plants of many manufacturing firms are stockpiled with unsold goods manufactured last year. “The development is as a result of the devastating effects of the exchange rate crisis, inflation, fake and sub-standard goods, smuggling and other macro-economics challenges.”

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CBN Lifts Ban On BDCs, Introduces New Operational Mechanism

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In a major development aimed at financial stability and strengthening the naira, the Central Bank of Nigeria (CBN) plans to resume its weekly intervention in the country’s foreign exchange (FX) market through the Bureau de Change (BDC) operators.

In 2021, the central bank, in a bid to achieve its mandate of safeguarding the value of the local currency, ensuring financial system stability, and shoring up external reserves, announced the immediate discontinuance of foreign currency sales to Bureau de Change (BDC) operators in the country.

However, the resumed intervention, which would reportedly commence today for funding as well as Tuesday for collection, will see the apex bank inject FX into the subsector in a bid to rescue the naira from further depreciation against major currencies, particularly the US Dollar. The collection will be at designated CBN branches in Lagos, Abuja, Kano, and Awka, while details of the naira accounts to be credited for funding bidding will also be made available today.

CBN is also expected to publish the list of eligible BDCs to benefit from its funding using certain compliance criteria.National Executive Council of Association of Bureau De Change Operators of Nigeria (ABCON) hinted on the latest developments through a memo to its members over the weekend.

The association also warned members that it will no longer be business as usual under the new supervisory regime of the central bank, as any infringement or infraction would result in outright revocation of license and prosecution.

ABCON said through the association’s various engagements with the central bank, in conjunction with ABCON’s strategic partners, CBN had agreed to its request, under the bank’s supervision, to inject liquidity into the market through a weekly intervention beginning today.

CBN assured ABCON that the new circular on the Revised Regulatory and Supervisory Guidelines to BDCs, which was introduced over the weekend, was only a draft exposure that required the association’s inputs before the release of the final guidelines by the apex bank.

To that effect, the letters of the guidelines were not cast in stone, the association’s leadership told its members, who had been worried over the sweeping reforms in the document, which, among other things, prescribed N2 billion and N500 million minimum capital for national and state BDCs, respectively.

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