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Power Minister canvasses for a stay of electricity tariff review

(Last Updated On: July 14, 2017)

 

By James, Michael Igiri

The Minister of Power, Works and Housing, Babatunde Fashola (SAN), has

admonished power users on the need to halt the incessant litigations on the new tariff

review regime, describing the planned review as necessary for the growth of the power

sector in Nigeria.

Fashola stated this on Thursday in a public lecture which held at the J.F. Ade Ajayi

Main Auditorium, University of Lagos, where he spoke on the power sector reform in

Nigeria, challenges and the way forward.

The former Governor of Lagos State threw his weight behind the privatisation of the

power sector, adding, “I believe, however, that the privatisation that we did in 2013

was well-intentioned but delivered with some deception.”

The minister, used the opportunity to express, his displeasure at calls from some

quarters for the cancellation of the privatisation processes and highlighted the need to

rework the process and make it work.

On the tariff system, he revealed, “Tariff is not fixed by the minister; I don’t fix tariff.

I have no power over it. What happened during the last tariff exercise was that I

expressed an opinion of support for the tariff.

“Tariff is fixed by the Nigerian Electricity Regulatory Commission. Tariff proposals

come from your Discos who should have met with you at consultative meetings. When

tariff meetings are called in the future, everybody must be there.”

According to the minister, there are major and minor tariff reviews, and a major

review is due every five years, but a minor review is due every six months.

“It doesn’t mean every time a minor review is due, the tariff will increase. If exchange

rate is N165 (to a dollar) when the tariff was reviewed and then it goes to N400, put

yourself in their shoes,” he said.

Describing tariff reviews as a necessary part of any business, he cited Singapore as

one of the countries that had really implemented tariff review for all of its utilities

effectively.

Fashola said, “We must stop going to court to get injunction to stop tariff reviews, it

puts us in the news for the wrong reasons.

“Government must also not interfere with tariff. One of the things that happen in the

last elections was that as the elections were coming, the last administration reduced

tariff in order to make you and I like them. But it created a massive debt for Nigeria.”

He added that when the government ordered the tariff reduction, it did not reduce

interest rates, the exchange rate cost of wages of the staff that were generating power

or the cost of gas and other inputs.

Briefing participants at the event on current state of power in the country, the minister

said the capacity of the power grid had expanded to 6,200 Megawatts under the

President Muhammadu Buhari administration following the completion of some

transmission projects.

He said, “When the National Integrated Power Project started, that is over 10 years

ago now, several contracts were issued to develop transmission projects. Many of the

equipment that were imported by the contractors were trapped at our own ports in 800

containers for almost 10 years, because the government did not budget to pay those

contractors.”

Other speaker at the event Prof. Akin Iwayemi of the Centre for Petroleum, Energy

Economics and Law (CPEEL), University of Ibadan advised that in order to meet the

demand for electricity that is stable and reliable, Nigeria must incentivise the whole

system and galvanise all her limited resources.

The event which was organised by the Department of Economics, had in attendance

the Pro- Chancellor and Chairman of Council University of Lagos Dr. Wale

Babalakin, Vice-Chancellor University of Lagos Prof. Rahamon Adisa Bello, former

Vice-Chancellor Prof. Oyewusi Ibidapo-One, Dean Faculty of Social Sciences Prof.

Iyiola Oni, as well as other members of the university management as well as faculty

members, academics, senior staff of the university, stakeholders in the power sector

and members of the press.