Rédaction Africa Links 24 with Kehinde Akintola
Published on 2024-04-18 18:02:34
The Chairman of the Nigeria Electricity Regulatory Commission (NERC), Mr. Sanusi Garba, recently revealed that the federal government would require a whopping N3.2 trillion in 2024 if it decides to reverse the recent increase in electricity tariffs. This disclosure was made during a stakeholders’ meeting convened by the House Committee on Power.
Mr. Garba emphasized that the current level of investments in the electricity sector is insufficient to ensure a reliable power supply. He warned that unless significant measures are taken to address critical issues such as foreign exchange fluctuations and the non-payment for gas, the sector could be headed for a major crisis.
Prior to the recent tariff review, Distribution Companies (DISCOs) were only required to pay 10% of their energy invoices. The absence of adequate financial backing for subsidies has created a liquidity challenge in the sector. This, in turn, has led to a decline in gas supply and power generation, contributing to system collapses and the overall instability of the power grid.
Mr. Garba raised concerns about the looming risks faced by generation and distribution companies, highlighting the importance of establishing a cost-effective tariff structure for the sustainability of the sector. He pointed out that tariff rates have increased from 55% to 94% of cost recovery between January 2020 and January 2023, with projections indicating a potential rise to N184/kWh due to currency unification and inflationary pressures.
The NERC Vice Chairman, Mr. Musiliu Oseni, defended the recent tariff hike, stating that it was necessary to prevent a complete shutdown of the electricity sector. The Chairman of the House Committee on Power, Hon. Victor Nwokolo, clarified that the purpose of the meeting was to address concerns about the tariff increase, Band A issues, and other related matters.
Hon. Nwokolo acknowledged the challenges faced by the industry, including infrastructure expansion, population growth, exchange rate fluctuations, and security threats to power installations. He stressed the importance of gas supply for power generation and emphasized the need for wider consultations before making any decisions on tariff adjustments.
While the committee has not reached a conclusive decision on halting the tariff increase, Hon. Nwokolo emphasized that such a decision would require a resolution from the entire House of Representatives. He expressed the committee’s commitment to seeking input from stakeholders, including the Transmission Company of Nigeria and Generation Companies, before presenting any recommendations to the House.
Ultimately, the focus remains on improving service delivery in the electricity sector to address security challenges, enhance economic development, and meet the growing energy demands of the Nigerian population. The stakeholders involved recognize the complexity of the issues at hand and are working towards finding sustainable solutions to ensure a stable and efficient power supply for the country.
Read the original article on Nigerian Tribune
