THERE are concerns over the Senate’s move to stop electricity tariff hike in Nigeria’s privatised power sector market, as the sector struggles with a liquidity crisis.
On Wednesday, February 21, the Senate, at the plenary, directed the Federal Government to stop plans to increase electricity tariffs, but the directive has attracted criticism.
Tariff increments are supported by the Nigerian Electricity Act 2024, which states that tariffs should be reviewed bi-annually to take care of foreign exchange differentials, inflationary pressures, and gas prices.
Currently, the Nigerian government is indebted to the gas generating companies, which has affected the gas supply to the power sector and is a major trigger to the current epileptic power supply.
The minister of power, Adebayo Adelabu, has confirmed the development and said Nigeria could not continue sustaining electricity subsidies, citing huge indebtedness in the power sector.
He said the sector was indebted to the tune of N1.3 trillion to generating companies (GenCos) and $1.3 billion owed to gas companies.
The minister also stated that only N450 billion was budgeted for subsidy in 2024, but the ministry needed over N2 trillion.
Energy experts and rights advocates told The ICIR that the Senate was not in tune with the realities of the power sector and should proffer solutions to the teething problems bedevilling the sector.
“Electricity is not a public utility anymore, it is now a commodity. We are presently owing gas suppliers in trillions, I didn’t hear the Senate speak on how to pay that debt, the inefficiencies we are facing in the sector can be traced to the subsidy. They’re not giving us ways out of this mess, only to be stating that tariff should not be reviewed,” said the Executive Director of Power Up Nigeria, Adetayo Adegbemle when speaking with The ICIR.
“I am certain the regulators that have been saddled with the task of keeping the power sector running will do their jobs,” he added.
Also commenting on the development, the National Coordinator of All Electricity Consumers Protection Forum, Adeola Samuel-Ilori, criticised the Senate’s decision, emphasising that the Senate resolution on the increase in tariff for next year, as approved by the Nigerian Electricity Regulatory Commission (NERC) is advisory, and the power to regulate and fix tariff in Nigeria Electricity Supply Industry (NESI) remains with the Nigeria Electricity Regulatory Commission (NERC).
Samuel-Ilori further buttressed his stance on the provisions of the Electricity Act 2024 as amended, which gives such power to the NERC and section 34(1)(4) of the same Act, which allows NERC to act as unbiased umpires in regulations of the activities between consumers and Discos.
“Section 114(2)(b) is unambiguous as to who holds the power to approve an increase in tariff when all perquisites and processes have been fulfilled,” he added.
Tariff halting by the Nigerian government has created a huge debt burden for the sector and dissuaded deep-pocket investors from investing in Nigeria’s power sector.
According to data from the Nigeria Electricity System Operator, the peak supply as of Wednesday, February 21, was 4186.67 megawatts, and the lowest was 3548.16 megawatts. Some sector analysts said this was a poor performance for a sector that has been privatised since 2013.
Just recently, the Abuja Electricity Distribution Company threatened to disconnect the Presidential Villa, and many agencies of government indebted to it to the tune of over N47 billion.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.