By Fatima Saka
The House of Representative Committee on Power has reiterated that it will take the entire house to stop the increased tariff hike, added that the essence of the meeting was to address the recent increase in tariff and the issue of band A and others.
The Chairman Committee on Power Hon. Victor Nwokolo on Thursday ascertained this as the Nigeria Electricity Regulatory Commission (NERC) appeared before the committee.
Hon. Victor Nwokolo a member of People Democratic People, (PDP) Delta, said that whether the increase will be stopped or not stopped, that can only be taken by the entire house.
Nwokolo said the officials of NERC and DISCOS have given the committee useful Information, adding “we have not concluded with them because the Transmission Company of Nigeria were not here and the Generation Companies too.
“We will hold further consultations with them by next week. But from what they have said, which is true, is that without the change in tariff, which was due in 2022, the industry lacks the capital to bring the needed change.
“Of course, with the population explosion in Nigeria, the areas being covered are beyond what they have estimated in the pastpast and because they need to expand their own network, they also need more money.
“Every day, there are changes to the exchange rate and there are also threats to power installations because of security, thereby increasing the overhead.
“The committee has not fully agreed with them because we are not saying either yes or no because we want to get more input and also find out the possibility of gas being sold to them in naira. More of this is dependent on generation and without the gas, you cannot have power.
“The committee cannot take any decision to stop the increase in tariff. That decision can only be taken by the entire HouseHouse and not at committee level. There must be a House resolution to stop it.
“That is why we are happy that the House is not sitting next week as that will afford us an opportunity for wider consultation so that we know what you present to the entire House. We are interested in the timeline for improvement in service delivery because what Nigerians want is service delivery because light will take care of our security challenges and many other things”
In his response, Chairman of the Nigeria Electricity Regulatory Commission (NERC), Sanusi Garba said that the Nigerian government would have to cough out a whopping N3.2 trillion as subsidy for the electricity sector in 2024 if the recent increase in tariff is to be reversed.
Speaking at a stakeholders meeting called by the House of Representatives committee on Power, Garba said that current investments in the sector were not enough to guarantee steady power supply.
He said if nothing concrete is done to address issues in the sector including foreign exchange Fluctuation and none payment for gas, the sector will be heading for doom.
He explained that prior to the recent review in tariff, DISCOS were only obligated to pay 10 percent of their energy invoice, adding that the lack of cash backing for aubaidy is creating a liquidity challenge in the sector.
He said further that as a result of the non-payment of subsidy, gas supply and power generation have continued to dip, adding that the continuous decline of generation and system collapse are largely linked to liquidity challenges.
He raised an alarm of what he called a looking risk not totally shut down by the Generation and distribution companies, achieving cost effective tariff is key to the sustainability of the sector.
He further explained that between January 2020 abe January 2923, tariff increased from 55 percent of cost to 94 percent lt cost recovery, adding that “the unification of FX and current inflationary pressures are pushing cost reflective tariff to N184/kwh
He said “if sitting back and doing nothing is the way to go, it would mean that the National Assembly and the Executive would have to provide about N3.2 trillion to pay for subsidies in 2024.”
Garba also said that only N185 billion of the N645 billion subsidy in 2023 has been cash backed, leaving a funding gap of N459. 5 billion.
Vice Chairman of NERC, Musiliu Oseni who also justified the recent increase in tariff said the increment was needed to save the sector from total shutdown.
