FG to spend N3.2trn on electricity subsidy –NERC chairman

By Tom Okpe

Chairman of the Nigeria Electricity Regulatory Commission, (NERC), Sanusi Garba, has said the Federal Government will have to spend N3.2 trillion as subsidy for the electricity sector in the year, if the recent increase in tariff is to be reversed.

Speaking at a stakeholders meeting called by the House of Representatives Committee on Power on Thursday at the National Assembly, Garba said current investments in the sector were not enough to guarantee steady power supply.

He noted that if nothing is urgently done to address issues in the sector, including foreign exchange, fluctuation and none payment for gas, the sector will be heading for doom.

He said: “Prior to the recent review in tariff, DISCOS were only obligated to pay 10 percent of their energy invoice. The lack of cash backing for subsidy is creating liquidity challenge in the sector.

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“As a result of non-payment of subsidy, gas supply and power generation have continued to dip, the continuous decline of generation and system collapse are largely linked to liquidity challenge.”

He further explained that between January 2020 and January 2923, tariff increased from 55 percent to 94 percent, adding that, “the unification of foreign exchange and current inflationary pressures are pushing cost reflective tariff to N184/kwh

“If we sit back and do nothing, immediately, it would mean that the National Assembly and the Executive would have to provide about N3.2 trillion to pay for subsidy in 2024.”

Also, NERC Vice Chairman, Musiliu Oseni, who also justified the recent increase in tariff, said the increment was needed to save the sector from total shutdown.

Chairman, House Committee on Power, Victor Nwokolo, (PDP, Delta) in his remarks, said the essence of the meeting was to address the recent increase in tariff and the issue of band A and others.

“We have not concluded yet, the Transmission Company of Nigeria, (TCN) wasn’t here, also, the Generation Companies.

“We will hold further consultations with them by next week. But from what we have heard so far, which is true, is that without the change in tariff, which was due since 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 committee level. There must be a House resolution on it.

“That is why we are happy that the House is not sitting next week as that will afford us an opportunity for a wider consultation.”