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George Etomi: How Nigeria’s new power policy impacts consumers
Nigeria’s ministry of power has introduced a new electricity distribution policy, called ‘willing seller, willing buyer’. In a statement, the ministry says under the new policy, electricity would be wheeled directly from generation companies to willing consumers ready to fully settle their bills. Director of Eko Electricity Distribution Company, George Etomi joins CNBC Africa to discuss the implication of this policy.
Mon, 09 Dec 2019 12:50:19 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- The urgent need to address the liquidity crisis in the power sector through segmenting consumer groups based on their willingness to pay cost reflective tariffs.
- The inevitable tariff adjustments resulting from the implementation of the policy and the importance of state interventions to protect vulnerable consumers.
- The shift towards market-driven pricing to end artificially low pricing practices and promote sustainability by reducing reliance on self-generation methods.
Nigeria's Ministry of Power has recently introduced a new electricity distribution policy known as the 'willing seller, willing buyer' agreement. This policy aims to facilitate the direct transmission of electricity from generation companies to consumers who are willing and able to fully settle their bills. George Etomi, Director of Eko Electricity Distribution Company, discussed the implications of this policy in an interview with CNBC Africa. The central theme of the conversation revolved around the impact of the new policy on consumers and various sector players. Etomi highlighted several key points during the interview that shed light on the potential benefits and challenges associated with the 'willing seller, willing buyer' agreement. One key point emphasized by Etomi is the urgent need to address the liquidity crisis in the power sector caused by non-cost reflective tariffs. He argued that segmenting consumer groups based on their willingness to pay cost reflective tariffs could help alleviate this crisis. The policy aims to leverage consumer willingness to pay to enhance liquidity in the industry. However, uncertainties remain regarding the relationship between generation companies (Gencos) and distribution companies (Discos) under this new arrangement. Etomi acknowledged potential friction between Gencos and Discos but stressed the importance of regulatory oversight in balancing their interests. He highlighted the collaborative efforts needed to navigate these challenges and emphasized the ultimate goal of resolving liquidity issues in Nigeria's power sector. Another key point raised in the discussion was the inevitable tariff adjustments resulting from the implementation of the policy. Etomi noted that while cost reflective tariffs may lead to price increases for some consumers, segmenting the market based on willingness to pay is essential for ensuring fair pricing and supporting vulnerable consumers. He highlighted the role of state governments in bridging the gap between cost reflective tariffs and regulated tariffs to protect vulnerable groups. The interview underscored the shift towards market-driven pricing in the power sector to promote sustainability and efficiency. As the sector moves towards cost reflective tariffs, there is a growing recognition of the need to end the practice of artificially low pricing, which has hindered the sector's growth and viability. This transition aims to mitigate the reliance on self-generation methods like diesel and petrol, which impose a heavier financial burden on consumers. Embracing cost reflective tariffs is seen as a crucial step towards reducing air and noise pollution associated with self-generation and enhancing the overall efficiency of the power sector. Despite the challenges and adjustments entailed in the transition to cost reflective tariffs, the interview highlighted the collective effort towards finding a middle ground that accommodates the sector's long-term sustainability goals. Lastly, the discussion touched on the fate of distribution companies awaiting license renewal or potential revocation. Etomi reassured that the regulatory issues surrounding license renewal would be resolved through dialogue and adherence to contractual obligations. He emphasized the importance of performance in meeting contractual requirements and the need for continuous engagement between sector players and regulators to ensure compliance and sustainability. Overall, the interview with George Etomi provided valuable insights into the implications of Nigeria's new power policy on consumers, sector players, and the broader energy landscape. It underscored the industry's ongoing efforts to address challenges, enhance efficiency, and promote sustainability in the power sector.
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