Eyes on Return on Investment

New investors in Nigeria’s power sector push for increase in electricity tariff inspite of the prevailing erratic power supply nation-wide

|  By Anayo Ezugwu  |  Dec. 16, 2013 @ 01:00 GMT

THE new investors in Nigeria’s power sector are looking for faster ways to recoup their investments. In the midst of epileptic power situation in the country, the new operators are seeking to increase electricity tariff. Already, some operators have arbitrarily increased the monthly charge from N750 to N1,500. Besides, they have also approached the National Electricity Regulatory Commission, NERC, to demand for an increase in tariff.

Realnews gathered that Sam Amadi, director-general, NERC, told the operators that they had no basis to ask for an increase when Nigerians were still lamenting the negative effect of the last increase and the worsening power situation in the country. Confirming the latest development, Amadi, said the agency had been contending with pressure from the new operators on the demands to increase electricity tariff. According to him, the investors have based their demand on the assumptions made by the commission in the Multi-Year Tariffs, MYTO, which they said was inaccurate.


“The new investors are already asking for an increase in tariffs and they have some reasons, which are valid. They have told us that the assumptions that went into the MYTO were inaccurate. Of course, we used 40 to 50 percent loss in transmission. So, they are asking for increase in tariff. We have been holding roundtable discussions with them,” he said.

Amadi stated that as a commission, the NERC had told the investors that any tariffs increase for now would be suicidal, stressing that the agency was still defending the last increase it approved. “But we have been talking to them, telling them that they have to take over these companies first; they have to try and are seen to have done something before we can even hold discussions on another tariff increase. So, that is where we still are.”

The Senate has also kicked against the proposed increase in electricity tariff. Philip Aduda, chairman, Senate committee on Power, has said the Senate would not pander to the whims and caprices of the new investors in the power sector by approving any hike in electricity tariff. He said the Senate would study the proposed tariff increase to ensure that the citizens were not overburdened with high tariff.

Speaking at the inauguration of the 33/33/11kV National Integrated Power Projects, NIPP, in Abuja, on December 2, Aduda said he was yet to receive the proposal to raise electricity tariff from the NERC. “I have not seen it (the proposed tariff increase) yet as they have not brought it to me. When I see it, of course, I will look at it because we can’t continue to overburden Nigerians with high tariffs,” he said.

According to him, his committee has summoned the minister of power and the managing director, Transmission Company of Nigeria, TCN, to appear before it over the challenges of power transmission in the country. He explained that the megawatts of electricity being generated in the country remained stranded as it could not be wheeled to the electricity distribution companies. “I am aware that much power is given to the FCT, but unfortunately to evacuate it becomes a problem. With the commissioning of the various sub-stations, I am sure that the evacuation of power and ensuring that power is delivered will be a thing of the past. However, we must also get our transmission right. We must ensure that those we have saddled with the responsibility of managing our transmission get it right. And we have already invited the minister. We are inviting them to the committee on December 3, because this is our commonwealth and if we give people our commonwealth to manage we must see to it that it is managed properly. We must look at the protocol between market operators and systems operators.”

Meanwhile, Chinedu Nebo, minister of power, said during the handing over of the Abuja Distribution Company to private investors that Nigerians should brace up for an increase in electricity tariff and some initial hiccups that may arise after the hand-over. He noted that one of the major challenges would be a possible rise in electricity tariff which he, however, assured would not last long. “It will reduce to a manageable level over time.”

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