Nigeria working out modalities to tie electricity tariff to supply ~Minister
Nigeria said it’s working out modalities to ensure that electricity tariffs in the county are tied to adequate power supply to the populace.
“It (power challenge) is costing us a lot. The regulators are working on a certain number of hours of service and tie it to tariff. We insist that the most vulnerable must not suffer,” Nigeria’s finance and budget minister Zainab Ahmed said during a Webinar.
Ahmed stressed that the current framework will ensure that apart from the fact that tariffs will be tied to power supply, the poor would no longer subsidise the rich.
She debunked speculations of political interference in the fixing of electricity tariff in the country, saying the responsibility to do that lies with the distribution companies in conjunction with the industry regulator.
Ahmed said the Distribution Companies (Discos) were responsible for setting the tariffs after consultations with consumers, subject to the approval of the Nigerian Electricity Regulatory Commission (NERC).
“Tariffs are set by Discos but they are expected to consult with consumers. Government does not set tariffs, but Discos do with the approval of the regulatory agency.
“Now, the rates are staggered. If the Discos agree with consumers after consultations and if it works, there will be more liquidity and Discos can have more financing, but it takes time,” she stated.
The Disco had fixed July 1, 2020 to the implementations of a new higher tariff regime for electricity but the decision was deferred following disagreement among stakeholders in the power sector.
Ahmed, who spoke at a webinar noted that the challenges in the power sector were costing Nigeria a lot, said government was striving to resolve the issues within the sector and some of its steps have started yielding fruits.
Ahmed noted that because of the nature of electricity supply, results are usually not felt until the entire process is completed.
She said aside the on-grid electricity supply, the government was also investing in alternative off-grid power sources.
According to her, as part of efforts in ensuring that things are done differently, the regulator has licensed separate companies to import metres to ensure efficiency.
The minister said the federal government was willing to support the companies with rebates and review of import duty. “But we prefer they bring in parts to enhance value addition,” she stated.
She also said Discos needed to remit more funds, adding that NERC was monitoring key performance indices and improvement plans submitted by the power distributors.
The minister said from feedback from NERC, consumers were willing to pay more, but added that the tariff hike must be tied to the provision of better service.