We won’t reverse hike in electricity tariff, says FG

The federal government says there is no going back on the 45 per cent increase in electricity tariff, revealing that a reversal will cost over N575 billion.

Babatunde Fashola, minister of power, works and housing, made the statement on Tuesday when he appeared before the senate committees on labour and power.

The minister said the new tariff could not be reversed because it was necessary for the market to survive.

Fashola said a number of indices, such as borrowing rate for investors, exchange rate, availability and cost of gas, and other factors contributed to the hike.

“One of the reasons why the tariff had to go up was that a major component, a significant number of our power plant depends on gas and out of about 26 power plants that we have only about three are hydro,” he said.

“We were heavily dependent on gas, people were exporting gas because gas was selling outside the country at four dollars and it was selling for domestic use at one dollar.”

He said despite the current situation, Nigeria was still among countries with the lowest electricity tariffs in Africa and the world.

Fashola added that since 2005 when the power privatisation process started, till 2013 when it was concluded, every segment of government was involved and would share the blame if there was any failure.

“Enabling laws for the process were passed by the aational assembly in 2005 , the process completed by the executive in 2013: if the process was bad, where was oversight?’’ he asked.

He pleaded with the lawmakers and Nigerians to be more patient with government and investors, saying three years was not enough to judge the success or failure of the sector.

When the Nigeria Electricity Regulatory Commission (NERC) announced the increment in electricity tariff in January, the senate directed that the tariff be reversed to enable it conclude hearing on the case, but the order was ignored.

Explaining the non-implementation of the directive on Tuesday, Anthony Akah, NERC’s acting chairman, said compliance with the order would have created “avoidable setbacks” in the sector.

He said if the directive had been implemented, a market gap of about N575 billion would have been created which would have compounded the initial market gap of N187 billion take-off tariff put on investors.

Akah said NERC was also hindered by a court order, obtained by six generating and distribution companies.

He said the commission could also not easily reverse the tariff as the process was in compliance with section 76 (8) of the law guiding the operations of the commission.

But the joint committee insisted that it was unacceptable for Nigerians to be paying so much but have limited power supply.

The committee adjourned the public hearing to Wednesday.