The Federal Government of Nigeria will need to come up with the sum of N3.2trn in 2024 to reverse the recent hike in electricity tariff.
This disclosure was made by the Chairman of the Nigeria Electricity Regulatory Commission, Sanusi Garba in Abuja at a stakeholders meeting convened by the House of Representatives Committee on Power, on Thursday, according to The Punch.
According to Garba, the current investment in the sector, although laudable, is not enough to guarantee a steady supply of electricity across the country.
In addition, He said that the power supply in Nigeria would continue to be a problem unless a comprehensive restructuring of the sector, including the fluctuations in the exchange rate, was carried out.
He noted that distribution companies were obliged to bear 10 % of their energy invoices before the tariff review, stressing that there was a liquidity problem in the sector due to a lack of cash reserves.
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 subsidy in 2024.”
Garba also said that only N185bn of the N645bn subsidy in 2023 has been cash-backed, leaving a funding gap of N459. 5bn.
Vice Chairman of NERC, Musiliu Oseni, who had justified the recent increase in tariff said the hike was important to save the sector from total collapse.
Chairman of the House Committee on Power, Victor Nwokolo (PDP, Delta) said the meeting was to deliberate on the recent hike in tariff and the various bands to which electricity consumers were recently categorised.
The lawmaker said the officials of NERC and DISCOS had given the committee insights while noting that “We have not concluded with them because the transmission company of Nigeria was not here and the generation companies too.
He explained “We will hold further consultations with them by next week. But 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 estimated in the past and because they need to expand their 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; 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 House and not at the committee level. There must be a House resolution to stop it,” he added.
