Hike in Electricity Tariff Is Irreversible –Fashola

Posted by African Examiner Featured, Latest Headlines, News Tuesday, May 31st, 2016

Ayodele Afolabi, Abuja

ABUJA, NIGERIA (AFRICAN EXAMINER) – Hope for possible reversal of 45 per cent hike in electricity tariff announced by the Nigeria Electricity Regulatory Commission (NERC) in January this year, was dashed on Tuesday, as the agency and the Minister of Power, Works and Housing, Babatunde Fashola declared the decision as irreversible.

Fashola and the NERC acting Chairman, Dr Anthony Akah, made the declaration to the Senate’s joint committee on Labour and Power during a public hearing session on the electricity tariff hike.

The upper chamber had in February mandated its relevant committee to conduct public hearing when a motion was moved to that effect by its Chairman, committee on Labour, Nazif Suleiman (APC Bauchi North).

The Senate had in its resolutions on the motion, aside ordering for the public hearing also ordered for reversal of the tariff hike by NERC which was however not complied with.

Explaining his refusal of obeying the directive, the NERC boss told the joint committee that obeying such directive would have created series of avoidable setbacks in the sector like a market gap of about N575billion which would have compounded the initial market gap of N187billion the take off tariff slammed on investors.

He said aside that, six generating companies (GENCOs) had before the Senate’s resolution, taken NERC to court over the tariff hike and that they cannot do final order on reversal of tariff since the process that led to it was in compliance with section 76 sub section 8 of the Act guiding the operations of the commission.

A submission supported by the Minister of Power, Works and Housing, Babatunde Fashola who stressed the sector needed the market reflective tariff to survive.

He stated that basket of indices led to the hike like borrowing rate for the investors, exchange rate, availability and cost of gas.

“One of the reasons why the tariff was increased was that a major component, a significant number of our power plant depends on gas out of about 26 power plants that we have only about three are hydro.

“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 $1.30, government review that price to of $3 .30 and it is the primary component for manufacturing.Power has come up it should make sense unless government decides to subsidise it”, he said.

According to the Minister, even with the recent hike in electricity tariff, Nigeria still ranks among countries with low tariffs in Africa and by extension, in the world.

He put it to the lawmakers that since 2005 when power privatization process started till 2013 when the major generating (GENCOs) and Distribution ( DISCOs) were handed over to investors, every segment of government was involved and if there is any failure now, it should be for all and not a particular group.

“Enabling laws for the process, were passed by the National Assembly in 2005, process completed by the executive in 2013. If the process was bad. Where was oversight, he asked.

He however pleaded with the lawmakers and Nigerians to be more patient with government and investors on the process as three years is not enough to judge its success or failure.

However, the Chairmen of the joint committees, Nazif Suleiman and James Manager along with their members, insisted that the tariff as at present, without commensurate power supply to Nigerians, is unacceptable .