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Why We Back New Electricity Tariff

| May 28, 2012 More

Governors of Niger, Bauchi and Anambra states yesterday sanctioned the federal government’s decision to adjust the electricity tariff. They insist it is the surest way to solve the biggest challenge of inadequate power supply in the country.

The new electricity tariff regime is expected to take off on June 1.

Speaking at a Town Hall Meeting on “Attaining Sustainable and Reliable Power Supply” convened by the Power Ministry, the governors, Babangida Aliyu of Niger State, Peter Obi of Anambra State and Isa Yuguda of Bauchi State, said the tariff adjustment would bring the needed investments in the power sector, which will in turn lead to tremendous turnaround of the country’s economy.

The Niger State governor who chaired the occasion noted that the new tariff regime would not only open up the power sector, but will also position Nigeria as an investment hub in Africa.

He said: “The federal government’s resolution to privatise the power sector will not only solve the challenges of inadequate power supply of electricity to homes, businesses and organisations, but will help to expedite economic development. When the sector is repositioned, it will contribute positively to quality of life of our people through private sector involvement. It will also engender efficiency and value for money”.

He said the privatisation of the power sector would enhance the nation’s growth and development in the area of industrialisation and reduce the cost of doing business in the country compared to other countries where electricity supply is taken for granted.

Aliyu argued that if Nigerians could be assured of improvement in quality services, they would be willing to embrace the proposed new electricity price regime and the cost of production of goods and services will reduce.

The governor spoke of the need for government to inject at least $10 billion annually to sustain the power sector, but doubted if government can afford such an amount now.

He added: “This is aside the debts and liabilities of the Power Holding Company of Nigeria (PHCN) estimated to be N340 billion. Evidently, the cumulative expenditure based on budgetary investment in the power sector is about N402 billion in the past three years. This huge haemorrhage is unacceptable given the limited success recorded so far. Hence private sector is required to rescue the situation”.

Aliyu, however, pointed out the need to stamp out corruption, saying anybody found culpable should be punished.

Speaking in the same vein, Obi noted that poor electricity supply was the greatest impediment to turning around Nigeria’s economy, pointing out that industries in Nigeria were going down by day due to electricity supply challenge.

He said governors were in support of tariff adjustment because it will bring the needed investment that would boost the economy.

Obi said Nigeria’s electricity tariff was about the lowest in sub-Saharan Africa, and argued that no sensible bank can lend money to an investor under such very low tariff structure.

Yuguda pointed out that Nigeria was not progressing economically because of the country’s failure to achieve steady power supply.

“We, the governors, are here to justify why we are in support of tariff adjustment. Nigeria can’t develop without electricity,” he said, adding that tariff increase was a major step to move the country forward economically, as it will attract Foreign Direct Investment, and reduce the cost of running businesses, schools and hospitals.

He said his state had embarked on some power projects and had obtained a 20-year loan guarantee to build a 150mw power plant that will run on diesel, low pour fuel oil and crude.

On his part, Lagos State Governor Babatunde Raji Fashola said he was not opposed to power sector deregulation, but argued that power generation alone cannot solve the energy needs of Nigerians and must be combined with conservation of energy.

Fashola said prudent use of energy was key to achieving sustainable and reliable electricity supply. For him, the only way to achieve this is: “If we adopt appropriate generation and appropriate conservation of power”.

The governor said Lagos had embarked on some power projects in an effort to boost electricity supply in the state.

Earlier, Minister of Power, Prof. Bart Nnaji, said the dialogue was meant to let the public know the steps taken so far by the government to improve power supply.

He said the tariff adjustment was one of such steps. “We must adjust the tariff to attract investment. The tariff is a critical element in attracting power sector investment”.

He said the current set back in delivering reliable supply was due to lack of adequate gas to power the existing gas- fired plants.

Nnaji said the new tariff structure had started yielding results as foreign energy giants, among them General Electric and Siemens, had signed an agreement to build power plants in Nigeria. With these developments, he said Nigeria’s set target of attaining 40,000mw by 2020 would be possible.

Category: Bauchi State News

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