Small Business Owners and civil society organisations, NGOs, have said there is no justification for the proposed further hike in electricity tariffs, following disclosure by the Federal Government, yesterday, that it is considering increasing tariffs for customers outside the Band-A category to improve the liquidity of the Nigerian Electricity Supply Industry, NESI.
Minister of Power, Chief Adebayo Adelabu, who disclosed this at the public presentation of the National Integrated Electricity Policy, NIEP and Nigeria Integrated Resource Plan, NIRP, in Abuja, said government can no longer afford the N3 trillion power sector subsidy. He pointed out that debt owed power generation companies, GenCos, had risen to N4 trillion and is unsustainable.
According to Adelabu, “The key issue in the market is illiquidity, and sector reforms, we’ll continue to focus on that. We will look at the tariff again. I’m not saying that we’re going to increase the tariff.”
“We are going to look at the tariff and see how we can improve on our modest achievement of last year. Not only to ensure that we grow the sector revenue, but to also ensure that we are able to invest more in revamping dilapidated infrastructure, so that the infrastructure carries the kind of reliable electricity that we envisage for the sector. We will look at it.”
He noted that with Band-B customers receiving about 18 hours of electricity supply and paying N63/kW, the gap between this category of customers and Band-A customers has become problematic. Speaking on the two documents, he said: “Collectively, the NIEP and the IRP present a unique opportunity to drive the transformation of Nigeria’s power sector through a data-driven and evidence-based approach.
“Beyond strengthening the sector, these frameworks have far-reaching economic implications, directly impacting supply reliability to small and medium-sized enterprises (SMEs) and large industries, reducing operational disruptions caused by power shortages, fostering economic growth and job creation, and accelerating local and regional development.”
The documents showed that government plans to phase out delayed electrification and self-generation phaseout by 2035.
But for this to happen, government expects about $29.23 billion investment into the sector. These investments are expected to hit $122 billion by 2045.
Adelabu harped on the need to strengthen the national power grid and make it more robust and able to attract manufacturers back to the sector. He noted that 60 per cent of manufacturers in the country are into self generation due to the fragile nature of the grid.
In her remarks, Head of Economic Development at the Foreign, Commonwealth and Development Office, FCDO, Sally Woolhouse said the United Kingdom government had supported the Nigeria Power Sector with about £200 million.
Woolhouse noted that the UK Nigeria Infrastructure Advisory Facility, UKNAIF, has been the vanguard of providing technical advisory support to state and federal government ministries, departments and agencies in Nigeria’s electricity value chain. She added that the shift towards work in state electricity markets, presents new opportunities in the power sector.
According to her: “It should be obvious to everyone that the UK and Nigeria enjoy a long-standing relationship and we are proud to continue supporting first class infrastructure development that leads to sustainable economic growth and also helps us build mutually beneficial strategic partnership for both of our countries.”
