The Nigerian government has admitted raising the electricity tariff in the country, even as the country’s power crisis worsened in the past four days. According to the Nigerian Electricity Regulatory Commission on Wednesday that meant that a subsidy on power projected to cost N600bn for the year, had been halted.
The NERC disclosed this on Wednesday, adding that the tariffs were raised in February. It explained however that subsidies payable by some consumers in some franchise areas of the distribution companies were actually reduced.
Sanusi Garba, the chairman of NERC, told journalists in Abuja that subsidy on electricity was a policy issue of the Federal Government that had to be to be brought to an end.
“The role of the commission is to make a determination of the rates that consumers should pay. So we strike a balance between consumers and investors.
“Now, subsidy is a policy issue determined by the government. The government will decide that the rates calculated or agreed by the regulator may at this time not be passed on to consumers. It has happened many times.
“In the past four, five years the level of subsidy has gradually been reduced, because you cannot run the electricity market on life support and say that investors cannot get their return on investment until government steps in to provide the required funding.”
According to him, February 1, 2022, adjustment was a minor review of tariff, adding that the commission had made it clear on its website that tariffs are for review every six months to take care of the foreign exchange component of cost and also inflation.
The World Bank and the International Monetary Fund have both asked the government to end subsidies on electricity and petroleum products as a means of reducing the budget deficit in the country.
Electricity supply in Africa’s biggest economy is trying to recover after the national grid collapsed at least two times within three days this week, with large areas of the country being thrown into full darkness.
The 2013 unbundling of Nigeria’s power sector that created distribution companies, generation companies, the Transmission Company of Nigeria and the Nigerian Bulk Electricity Trading company, has come under severe criticism as the measure has failed to tackle power shortage in the country.
Operators in the industry blame inadequate funding for the persistent challenges that have challenges. The generating companies, for instance, recently blamed the bulk buying company, accusing it of not meeting its obligations for the power it buys from them.
Recent reports showed, for instance, that power distribution companies are only able to collect a fraction of the total revenue for the power they sell to their customers.
