Chairman of the Nigeria Electricity Regulatory Commission, (NERC), Sanusi Garba, yesterday, said the Federal Government of Nigeria will need about N3.2trillion in 2024 to reverse the recent hike in electricity tariff.
He added that if a total sectoral overhauling was not carried out, including fluctuation in foreign exchange, power supply in Nigeria would continue to pose a challenge.
Speaking in Abuja, at a stakeholders’ meeting convened by the House of Representatives Committee on Power, Garba said that current investment in the sector, though commendable, was not good enough to guarantee a steady power supply across the country.
He explained that before the recent review in tariff, distribution companies, (DisCos), were only obligated to pay 10 per cent of their energy invoice, adding that the lack of cash backing is creating a liquidity challenge in the sector.
He further explained that between January 2020 and January 2023, the electricity tariff increased from 55% to 94%, adding that “the unification of forex and current inflationary pressures are pushing cost reflective tariff to N184/kwh
He said, “If sitting back and doing nothing is the way to go, it would mean that the National Assembly and the Executive would have to provide about N3.2 trillion to pay for subsidy in 2024”.
Garba also said that only N185 billion of the N645 billion subsidy in 2023 has been cash-backed, leaving a funding gap of N459. 5 billion.
Vice-Chairman of NERC, Musiliu Oseni, who also justified the recent increase in tariff, said the increment was needed to save the sector from total shutdown.
Chairman of the House Committee on Power, Victor Nwokolo, said the essence of the meeting was to address the recent increase in tariff and the various bands to which electricity consumers were recently categorized.
The lawmaker said the officials of NERC and DisCos have given the committee useful Information, saying, “We have not concluded with them because the Transmission Company of Nigeria, (TCN), was not here and the generation companies too.
“We will hold further consultations with them by next week. But what they have said, which is true, is that without the change in tariff, which was due in 2022, the industry lacks the capital to bring the needed change”.
“The committee cannot take any decision to stop the increase in tariff. That decision can only be taken by the entire House and not at the committee level. There must be a House resolution to stop it”, he stated.
