On Wednesday, 25th of January, the Nigerian Electricity Regulatory Commission (NERC) declared that unless there is an increase in consumer tariff or government subsidy provided for the power firms, Nigeria will not get steady power supply.
Dr Tony Akah, the acting Chairman of NERC, in a presentation to the Senate Committee on Privatisation at the commission’s headquarters in Abuja, emphasized on the serious problem of liquidity in the power sector and unless it is fixed, there is absolutely nothing that the committee can to attain steady power supply in the country. He then added that unless the federal government was willing to provide some form of subsidy for these private power firms, the weight will have to fall on the consumers’ tariff.
However, the Committee refused his position on the issue. They insisted that, instead of the Federal Government allocating subsidy to the power sector, they should issue licences to more power investors, so as to end the monopoly of the current operators.
Akah stated that NERC is stumped on ideas to get steady power supply in the country.
He said, “So, the challenge we have as regulator here is that we don’t know which other miracle to do, because in the absence of subsidy coming in, in the absence of other mechanism coming in, we are bound under the law to provide a tariff that will recover the cost of investments.
“And in the absence of that, there is no incentive for the players in the market to come up and give you power.
“I always say that private players are there to provide services and at the same time make a fair return on investment. This is fair return on investment either via the right tariff, or tariff that is highly subsidised by the government, or through other incentives that can reduce the cost of investment.
“This can be through gas, tax holidays and many more. But I know that the Federal Government at this point in time is considering various options to see how it can mitigate any possible rate hike.”
Dr Tony also compared the Power sector with the Petroleum sector, explaining that the power sector is also very important and it wouldn’t be out of place for the sector to get the Federal Government’s intervention in form of subsidy.
“If we can have subsidy in the petroleum sector even up till today why can’t we figure out a mechanism to support the power sector?” he said.
He pointed out that foreign exchange scarcity and the ever falling value of Naira are the major reasons behind the liquidity problem in the power sector.
The Chairman, Senate Committee on Privatisation, Senator Ben Murray-Bruce, strongly rejected the proposal stating that most salary earners in the country have not gotten any increase in their salaries in years but still, the power sector wants a 200% increase in consumer tariff.
He siad, “The same factors affect me as a businessman; they are not exclusive to the power sector. I’ve not been able to increase my rates but I’ve been able to survive. So also many other businesses in Nigeria.”