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Proposed Electricity Tariff Through The Nigerian Electricity Regulatory Commission





Proposed Electricity Tariff Through The Nigerian Electricity Regulatory Commission

For some time now, the move by the Federal Government to increase electricity tariff from June 1, 2012, through the Nigerian Electricity Regulatory Commission has continued to generate different reactions. Expectedly, a large spectrum of the Nigerian populace has rejected it as another move by the government to further impoverish already poor Nigerians. However, while the government is resolute on going ahead with the new tariff structure, the people on the other hand are equally bent on resisting the move to the very end. As usual, the Nigerian media have not been left out of the debate. They have been very professional in throwing up the core issues involved. To start with, it is quite an interesting scenario to see Dr. Sam Amadi, the Chairman of the Nigerian Electricity Regulatory Commission, passionately trying to convince Nigerians on the need to embrace the new tariff and it’s only remarkable to say, that his passion is worth saluting. However, that is not the real issue. The real issue is that as at today, about 70 per cent of Nigerians are still extremely poor, with many more already made poorer by the partial removal of the fuel subsidy, and now a new policy is coming to worsen their economic misery.

In the words of Amadi, about 50 Private Independent Power Projects have been licensed to produce about 20,000 megawatts of power in the near future and his argument is that, if these plants are not cost-effective, then the ultimate investors will not invest as expected. Part of the argument is also that the federal and state governments are looking at selling their various Independent Power Plants, and the tariff has to be right for the right investors to come in. Amadi has also argued that the NERC is looking at regulating the price now, so that in the near future none of these licensed power companies will suddenly exercise a change of heart and distribute power at a price higher than the set price. However, I think that though this appears quite an attractive argument to accommodate, the question now arises, “does this not in itself run contrary to the spirit and letter of private sector investment/capitalism which is the direction in which the power sector is heading?”

Amadi has talked about the new metering system in which Nigerians will no longer have to pay for meter as the cost of it would have been included in the new tariff structure. That again may suffice as another convenient argument to swallow, but then how come the Power Holding Company of Nigeria, which is supposed to be the only existing structure on which this system is to take off, is still rolling out new pre-paid meters even up till now? And to say these are the same government agencies that are supposed to be working hand in hand.

Just last year, electricity tariff was silently increased from N4.20K to N7, without any significant improvement in power generation and distribution, except for myriad of excuses about how the government couldn’t get gas to the various power stations or how water level continued to go down in Kainji Dam.

It is quite ridiculous that Nigeria, as a country that started generating electricity in 1896 from Ijora, still continues to shoulder the burden of an epileptic power sector, more than 100 years after. We are at present a country powered by all sorts of generators, the most popular of which is the very nauseating one called “I better pass my neighbour”, while the country’s power company has become a standby. To make matters worse, even the State House is powered by generator. How can a government that continues to budget huge amounts of money yearly for diesel and generator to power the State House, come before Nigerians to pretend to be serious about reforming the power sector? So, what happens to the various powerful friends of government who are still importing generators on a large-scale and have turned our country to a dumping ground?

In the considered view of this writer, there is nothing wrong in the Federal Government’s effort to reform the power sector. In fact, it is a task worth commending. However, it is only unfortunate that we are a country with a penchant for always putting the cart before the horse. It is the sole responsibility of government to provide the necessary infrastructure, to drive the growth and development in all spheres. This duty the government cannot delegate to the private sector, under whatever guise. Governments the world over are known for investing heavily in massive infrastructure in the area of power and when this is now sustained, the private sector will be brought in as a junior partner, not a senior partner. This is the direction our government should go. If the Federal Government is indeed serious about reforming the power sector, she should continue in her drive to build more power plants and the necessary infrastructure all over the country. When this is done and electricity supply becomes at least conveniently stable, she can then go ahead and increase the tariff. It is only trite to say that once the people see what they are paying for, they will definitely pay.


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