The Centre for Economic Policy and Development Research, Wednesday called on the Federal Government to immediately scrap the MYTO, stating that it is ineffective and responsible for the epileptic power supply in the country.
In its July 2020 policy brief, the CEPDeR, which is embedded in Covenant University, Ota, declared that the (MYTO) should be abolished because it is ineffective and unsustainable, resulting in current operational inefficiencies in the power sector. The policy brief was authored by Dr Obindah Gershon, Senior Lecturer, Department of Economics and Development Study, Covenant University; Queen-Esther Oye, Evans Osabuohien, Adesola Afolabi & Victoria Okafor, all of the Department of Economics and Development Study, Covenant University. The Multi-Year Tariff Order (MYTO) is a tariff model for incentive-based regulation that seeks to reward performance above certain benchmarks, reduces technical and non-technical/commercial losses and leads to cost recovery and improved performance standards from all industry operators in the Nigerian Electricity Supply Industry.
It is used to set wholesale and retail prices for electricity in the industry by employing a unified way to determine total industry revenue requirement that is tied to measurable performance improvements and standards. CEPDeR also called for a review of the guaranteeing role of the Nigerian Bulk Electricity Trading (NBET) company in a multi-buyer electricity market, adding that the agency’s intervention in the power sector should also be redefined for effectiveness. “Nigeria’s persistent electricity challenge is a socio-economic one that requires a sustainable solution to induce economic welfare gains and accelerate the economy on the path of sustainable development, particularly with shrinking government revenue occasioned by COVID-19,” it stressed.
In addition, CEPDeR said, tackling Nigerian gas-electricity market crises involves increasing gas utilisation in electricity generation, adding that it would be achieved through successful implementation of the Natural Gas Expansion Programme (NGEP) an ongoing initiative by the Nigerian Ministry of Petroleum Resources. It maintained that “the government needs to implement regulations to enable price discovery in gas industries. The funding and contractual structure of the recently commissioned A–KK gas pipeline project seems to show that the market could be trusted and supported. “The cost of fuel, cost of purchased power, employee costs, interest charges, basically all costs that necessitate electricity availability must be balanced with the revenue from customers, government subsidies, as well as, supplier credit.”
“There is the need to consider active and private concessioning of the electricity Transmission System Operator (TSO) as well as ensure that relevant measures (or institutions) to reduce transmission and distribution losses are adopted (set up). Above all, the unbundling government ownership in remaining sectors of the electricity value chain is a sustainable way to go.” The centre further called for the passage of the Petroleum Industry Bill, PIB, into law, especially because it would have positive multiplier effects on the natural gas industry. He called for a restructuring of the Nigerian National Petroleum Corporation (NNPC), making it a profit-driven and efficient self-financing organisation capable of funding domestic gas supply investments. He also advocated that some of the oil and gas prospecting and licensing requirements which may stifle investment should be reviewed.