THE Chief Operating Officer (COO), Nestoil Group and Managing Director/CEO, Century Power Generation Limited, Dr. Chukwueloka Umeh, has identified cost reflective tariff as the necessary ingredient for the realisation of adequate and steady power supply in Nigeria.
According to him, without the cost reflective tariff, it would be difficult for investors to increase investment targeted at increasing their capacities to generate, transmit and distribute commercial electricity to consumers.
Speaking weekend at a virtual dialogue on, “The Dilemma of Electricity Tariff Regulation in Nigeria,” he reiterated that the government should let the sector first develop before coming up with regulations akin to the growth in the telecommunication sector.
He said: “Until government realise that power is not a social service, Nigerians won’t enjoy stable power supply.” Continuing, he said: “The government should be concerned about setting the regulations that would encourage investors to pump in their resources into the sector and not regulating to stifling it.
“Total deregulation of the sector as was done with the telecommunication sector is the way to go if Nigerians must enjoy stable electricity with the right pricing.
“We should start thinking differently. It is time to take a very different approach. We need to completely deregulate the sector. Allow the sector to grow, give room for investors to come in and then regulate it.”
The Nigerian Electricity Regulatory Commission (NERC), had earlier approved the implementation of cost reflective tariff from July 2020. But the intervention of the legislators culminated in the suspension of the new tariff until the first quarter of 2021, meaning that the sector would continue to depend on subsidy for survival.
However, speaking in Lagos, recently, President, Lagos Chamber of Commerce and Industry (LCCI), Mrs. Toki Mabogunje, said: “We acknowledge the postponement of the planned hike in electricity tariff by the power distribution companies to the first quarter of 2021, considering its impact on households and businesses that are yet to recover from the covid-19 shock.
“We understand that the upward review of power tariff is inevitable due to the rising cost of electricity generation in the country. Current tariffs represent 60 per cent of actual cost-reflective tariff, while the shortfall is being covered by the Federal Government through subsidies.
“Electricity supply is being challenged by inappropriate tariffs which undermine the economics of investment in the power sector and consequently inhibiting investment in the sector.
This situation also impacts adversely on liquidity in the sector. However, equitable billing demands that electricity consumers are metered. This is the only way to engender the confidence of consumers in the billing process. Metering should therefore be accorded a high priority.”