Senators kick against electricity tarrif - NEWS FRONTIER DAILY


Monday, April 29, 2024

Senators kick against electricity tarrif


The federal government has said that if the Power sector must be revived to perform optimally, a total sum of 10 billion dollars was required yearly, just as it also disclosed that the country would cough out N2.9 trillion to achieve full subsidy of the sector.
Speaking in Abuja at a one day investigative hearing on halting the new  electricity tarrif increase by the Nigerian Electricity Regulatory Commission (NERC) for onward implementation by the Distribution Companies (DisCos), the Minister of Power, Adebayo Adelabu said the 10 billion dollars was needed anually in the next ten years  to revive the nation's power sector and end the liquidity challenge.

This is as Senators have called on the Minister of Power, Adebayo Adelabu and the Nigerian Electricity Regulatory Commission, NERC, to as a matter of urgency, reverse the recent decision to increase electricity tariff for band A customers in the country. 

The investigative hearing by Senator Enyinnaya Abaribe,  APGA, Abia South led Senate Committee on Power is also about  the N2.9tn required for electricity subsidy payment, other debts owed in the sector, and the state of metering in the country  as well as the $1.3 billion owed gas companies even as it asked why Nigerians were suddenly classified under various bands.

The Minister told the Senate Committee that the major challenge in the sector was absence of liquidity, saying that the sector has been operating on a subsidised tarrif regime,given the absence of  a cost reflective tarrif, just as he stressed  the subsidy had not be funded over the years as huge liabilities was been owned the Generating Companies ( GenCos) and the Gas Companies.

Adelabu who noted that the inability of the government  to pay outstanding N2.9 trillion subsidy was due to limited  resources, hence the need to evolve measures  to sustain the sector, however pleaded with the Senators to support  the process of  paying the debt  owed  operators across the value chain of generation  transmission and distribution.

According to him, the increase was  based on supply and that  any customer that do not receive 20 hours power supply  will not be made to pay the new tarrif, adding that  the government was committed to ensuring sustainable  reform in the sector, even as he told the Senate that eight million meters would be acquired in the next four years. 

The Minister who noted  that there was the urgent need to clear the outstanding debt owed GenCos and Gas companies, said, "For this sector to be revived, government need to spend nothing  less than  10 billion dollars annually in the next 10 years. This  is because of the  Infrastructure requirement for the stability of the sector,  but government can not afford  that.

According to him, poor metering remains a big issue too in the industry when he told the lawmakers about how a company, Ziklag Networks Limited allegedly collected N32 billion for a contract to supply meters but has refused to do so in 20 years.

"And so we must make this sector attractive to investors and to lenders. So for us to attract investors,and investment, we must  make the sector attractive, and the only way it can be made attractive is that there must be commercial pricing.

"If the value is still at N66  and government is not paying  subsidy ,the investors will not come. But now that we have increased tarrif for a Band, there are interest been shown  by investors."

According to Adelabu, to  improve power supply, the  government was investing in hydro electric  power, even as he said  that  construction of 700 mega watt power  in   Zungeru had commenced, while  Kashimbila Hydroelectric power plant of 40 mega watt was awaiting evacuation to improve generation.

The Minister also disclosed that there was also an on going investment of 26 small  hydro power dams to boost electricity production across the country.

Officials of the Central Bank of Nigeria were also on ground to provide details on how to close the metering gap of 8 million meters. 

In his submission, CBN Director of Development Financing, Sahaad Ahmad said the CBN provided N55 billion loan which was assessed by all the 11 DISCOS, pointing out that only N6b has been paid back and that CBN's  intervention has done little to stop estimated billing as many customers remain unmetered.

The only group that seems comfortable with NERC and its action appears to be the Association of distribution companies.

Every other speaker -including the Manufacturers Association of Nigeria and a former NERC Chairman, Sam Amadi who believes sufficient consultation was not done and that the increase was discriminatory and in violation of the law.

Chairman,  National Electricity  Regulatory Commission,  NERC, Sanusi Garba solidly backed the position of the Minister, said that it was a “miracle” that the DISCOS remained afloat to supply electricity as at the 1st Quarter of 2024.

When it was time for the Senators to respond to the presentation of the Minister,  they however decried the experiences of Nigerians on electricity supply over the years, despite the unbundling of the sector.

The toughest opposition came from the Senators themselves -who believe the DISCOS have done little to improve their capacity and are all out to rip off their customers to cover for their inefficiency.

On his part, the Vice Chairman of the Committee,  Senator Lola Ashiru, APC, Kwara South who noted that Nigerians were  paying for inefficiency of power sector operators, said that there was a lot of inefficiency across the value chain of generation, transmission and distribution, adding that  poor Nigerians must be  protected and that  there was the need to consider a reversal of the  tarrif increase .

Also speaking, Senator Simon Lalong, APC, Plateau South who told the Minister that there was no consultation before the increase, said that issues of palliative should have been discussed and provided  before the tarrif increase.

On his part, Chairman of the Committee,  Senator Abaribe who noted that  what Nigerians wanted was  a solution to the issues and ways to ensure liquidity in the sector,  also decried the non of appearance of a company "ZIGLAKS" over the failed agreement  to provide prepaid  meters  for Nigerians, just as he alleged that the company had received N32 billion  in 20 years to meter Nigerian electricity  consumers.

Also speaking,  Senator  Adamu Aliero,  PDP, Kebbi Central 
who also said that there was no due consultation before the tariff was increased, said that the public was not at peace with the increase, saying that the increase was over 200 per cent, hence the need for  a reversal of the  tarrif increase.

Presentations were made by the Nigerian Electricity Regulatory Commission (NERC), Manufacturers Association of Nigeria (NAN), Association of Power Generation (Gencos), Electricity Distribution Companies (DisCos) among others.

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