BREAKING NEWS, Power
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Nigerian government insists it will not review the recent 45 percent hike in electricity tariff in the country because it will cost it more than N750 billion to do that
| By Anayo Ezugwu | Jun 13, 2016 @ 01:00 GMT |
THE federal government of Nigeria has no plans to review downwards the increase in electricity tariff recently. The government made this obvious at the beginning of the public hearing on the 45 percent increase of the electricity tariff. The government told the Joint Senate Committee on Power, Employment, Labour and Productivity who is doing the public hearing that a reversal of tariff will cost the government more than N575 billion.
Babatunde Fashola, minister of power, works and housing, said adequate consultations were carried out among stakeholders in the power sector before the new tariff was fixed. He asked those expecting the federal government to reverse the 45 percent increase in electricity tariff to perish the thought as doing so will be counter-productive.
According to him, it is too early to judge the effectiveness of the privatisation of the nation’s power sector, which was done only in 2013 by the administration of former President Goodluck Jonathan. He urged the Senate to study the report of the House of Representatives, which had earlier carried out a similar public hearing, noting that the report would give them a comprehensive knowledge of events, which led to the hike in electricity tariff.
The minister defended the 45 percent tariff increase done by the Nigeria Electricity Regulatory Commission, NERC, regretting, however, that the destruction of pipelines in Niger Delta region by some militants had continued to frustrate efforts to improve power supply. “Let me say again with all relevancies and for the purpose of those who will benefit from this public hearing that today there is no Power Holding Company of Nigeria, PHCN anymore.
“And we must migrate because we have moved on from it. As a minister, I inherited a power sector where government interests had been illegally sold and therefore, I don’t control how power is distributed. I don’t control how power is generated as was possible to do in the past. They are now largely private businesses except those where government now has some minority shares and so, government is now a minority shareholder in businesses where there are majority shareholders and we can only exercise collaborative pressure to get things done, but things must be done now on a commercial basis.”
Fashola said in the past, it was easy for government managing the distribution access to say give power to the people; don’t collect money. But he said this was no longer possible because government had become a minority shareholder in the business. “Government’s control is limited and it is largely exercising regulatory activities through the NERC, which sets the tariff.
“So, my interventions here would be largely to express why I support what NERC has done and to help amplify my understanding of it. The distribution companies, Discos, were making it very clear to us that if we did not give them the market reflective tariff. It meant that government would have to carry the continuing cost that accumulated in the region of about a trillion naira. We are not insensitive to Nigerians owing to their challenges. We are looking for the best way to solve what has become an over 60 year’s problem since 1950 when Electricity Company of Nigeria was first created.”
Fashola said one of the reasons why tariff had to go up was that a major component, a significant number of the nation’s power plant depended on gas, adding that there were only three hydro out of about 26 power plants. “We were heavily dependent on gas, people were exporting gas because gas was selling outside the country at $4 and it was selling for domestic use at $1. Government reviewed that price to a total of $3,” he said.
Contributing, Anthony Akah, acting chairman, NERC, said NERC painstakingly engaged power firms as well as carried out wide and extensive consultations with relevant stakeholders before fixing the new tariff. He listed those consulted to include the organised labour involving the Nigerian Labour Congress, NLC, and the Trade Union Congress, TUC, which has persistently called for the reversal of the tariff, disclosing that labour did not raise any formal objection in writing before or after the increase.
But the Senate Committee lamented the deplorable state of power supply in the country and told Fashola to live up to his responsibility. Lamenting the state of power supply in the country, the Senate committee accused Fashola of defending what it perceived as an unjustifiable increase in electricity tariff, lashing him for unnecessarily defending, pampering and protecting the power firms.
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