Wednesday, 3 February 2016

FG To NASS: You Can’t Stop Hike In Electricity Tariff


The federal government has said that National Assembly lacks the power to stop the Nigerian Electricity Regulatory Commission (NERC) from reviewing electricity tariffs.

Minister of Power, Works and Housing, Mr. Babatunde Raji Fashola, who addressed National Assembly correspondents after his budget defence, declared that NERC was constitutionally empowered to set electricity tariffs for consumers in the country.

“The law passed by the National Assembly clearly gives NERC the responsibility and power to give a tariff that enables them to recover their investment and returns on investment. So nothing unlawful or illegal has happened. So I think it (the problem) was the way it was managed before we came”, he said, adding that the tariff is reviewed every two years.

The two chambers of the National Assembly had on Sunday warned NERC to halt plans to implement the new electricity tariff regime in the country following a motion passed by the House of Representatives in mid-December, 2015.

Speaking on the importance of federal government’s strategic partnership with the private sector in order to generate more electricity, Fashola explained: ‎”People have been hearing for the past 20 years that power projects are over 99 per cent completed. It is absolute nonsense. As far as I am concerned, the ultimate thing is to get it to work.

“(Whether) One per cent or 99 per cent, we need to get it to work and the best way to get it to work in the interest of Nigerians is to enter into any form of partnership and we will look into that.

“It is not about what I think, and I said this much before: whether we have electricity or not, it is not about what all of us agree we must do; electricity is a product; it is made from raw materials. Some of the raw materials are gas, some of the raw materials are power plants and they are also related.

“So, the issue of tariff is the single issue of price. When the raw materials go up, the price cannot stay the same. You may ask why can’t we have more power before the price goes up?

“I am also a consumer, but we see that investments in power are not where they should be, and part of the reason why government opted for privatization was to get more private capital.

“If the recovery price and the income and profit do not make economic sense to the investor, would you do that business if you are the one?

“So it is not what I want; it is what I think will solve the problem. Everybody is owing everybody in the power equation and they are also owing banks.

“There are a lot of investors who want to pay a little more than the open market tariff. If we want them to come into the industry, we have to allow the new tariff order which allows for embedded order.

“There are a lot of people producing excess power. They want to put it on the grid but the price must be right. In the process of privatization, government was perhaps unwilling to confront Nigerians with the real market price so they were reviewing the price every two years.

“That gave the impression that price is reviewed every two years, but that should not have been. Government should have told us what the price was.

“What we have now is a 10-year tariff. So it is not going to be changing every two years. There are indices that will affect the need to change either up or down.”

…Power supply to rise by 2000MW by year end – Fashola

The minister of Power, Works and Housing, Babatunde Fashola, has expressed optimism that given the various plans undertaken by the present administration in the power sector, electricity generation would increase by an additional 2,000 megawatts (MW) by the last quarter of 2016.

The minister, who stated this at the ministry’s budget defence before the Senate Committee on Power and Mines in Abuja yesterday, added that a lot had changed in the management of power in the country in recent times.

He explained that distribution of power is no longer government business, noting that it had been taken over by private companies with the transmission aspect being managed by Manitoba International, a Canadian firm.

The minister, in a statement yesterday by the ministry’s assistant director, press, Etore Thomas, said the 2016 budget focuses more on the transmission chain, completion of ongoing projects, refurbishing power plants and tackling gas supply issues.

The minister noted that if all these are well addressed, the expected projection would boost electricity generation in the country.

Fashola further stated that the ministry planned to take its role as a policy maker more seriously while the agencies will be tasked more on implementation and execution of government’s agenda for the sector.

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