The Federal Government, on Tuesday, ruled out the possibility of reversing the 45% hike in electricity tariff made by the Nigeria Electricity Regulatory Commission (NERC) in January this year. The Minister of the Minister of Power, Works and Housing, Babatunde Fashola made this known during a public hearing organised by the Senatae Committee on Labour and Power, on Tuesday. NERC Acting Chairman, Dr Anthony Akah, also reechoed the Ministers position during the Public Hearing.
The Senate had in February this year had set machinery in motion to look into issues on electricity tariff after adopting a motion moved to that effect by its chairman, committee on Labour, Nazif Suleiman ( APC Bauchi North). Aside ordering for the public hearing on the issue, the Senate also ordered for reversal of the tariff hike by NERC which was however not complied with.
On why the Agency refrained from lowering the tariff, 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 he said would have compounded the initial market gap of N187billion the take off tariff slammed on investors. According to him, six generating companies (GENCOs) had before the Senate’s resolution, taken NERC to court over the tariff hike and that they could not 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.
Fashola had said the sector needed the market reflective tariff to survive. He said basket of indices led to the hike like borrowing rate for the investors, exchange rate, availability and cost of gas etc. “One of the reasons why the tariff went up 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 subsidies it”, he said. The Minister said even with the recent hike in electricity tariff, Nigeria still ranks among countries with low tariffs in Africa and by extension, in the world.
Fashola said while in 2005 power privatization process started running to 2013 when the major generating (GENCOs) and Distribution ( DISCOs) took over as investors, every segment of government was involved. He said if there has been any failure now, such should be shared by all and not a particular group. “Enabling laws for the process, were passed by the National Assembly in 2005, and process was completed by the executive in 2013. If the process was bad, where was oversight? he asked