Increase in electricity tariff inevitable – Expert

An increase in electricity tariff is one of the solutions to the power sector crisis as operators cannot break even without increasing the tariff to reflect cost.

The Managing Director of Frontier Oil Limited, Dada Thomas, stated this in an interview n Lagos.

Dada Thomas, also the President, Nigerian Gas Association, said Nigerians should realize that whenever they turn on their generating sets, they spend two to three times what they would have spent on electricity bills. “Why do you pay more than you should have paid on electricity tariff?” he asked.

“The increase is very necessary to get the power sector out of the situation now. We are losers as long as we resist increasing electricity tariff.  This is because an increased electricity tariff is cheaper than what we are paying every day to generate our own power supply,” he said.

“The benefit of paying your bills is that you will start getting closer to the 24-hour power supply. Secondly, you don’t have to worry about the pollution of environment and health, noise pollution and inhalation. You don’t have to deal with those mechanics who cheat you every time. Now even the rich are controlling wastages of electricity, so the laws of economics are taking place in Nigeria”, he stated.

The Frontier Oil Limited boss maintained that the power sector reform was a good thing because it is taking the power system out of the government daily operation and putting it into the private sector hands. “However, any private investor wants to see a return on his investment after investing his fund. You can only do that if your plants are working and producing. Unfortunately, the actual implementation and execution of the process were corrupted. And we had what I call chronic capitalism that put us in the situation where we are today. In my view, those who bought the 10 Gencos and 11 Discos did not do adequate due diligence and they did not fully understand the power business.

“This is why we have Discos that are insolvent, where Discos are alleged to be collecting money but are not remitting it. Where Discos are refusing or claiming they do not have capital to roll out prepaid meters and are carrying out the illegal estimated billing. But the government has also failed to meet its own part of its obligation of increasing tariff to be cost reflective. Where we have a judicial system that is upholding lawsuits, whereby Discos are suing Gencos and preventing them from tendering letters of credit which they committed to,” he stressed.

This mess, according to him, is as a result of encouraging a lack of sanctity of agreement in this country. If we are going to benefit from the power sector we need the enforcement of law and enforcement of agreements and contracts. If we enforce laws of agreements and contract, this madness in the power sector will stop and we begin to see improvement.

Secondly, the NGA president stated that Nigeria has a very weak regulation, adding that the National Electricity Regulation Commission has not had a commissioner for almost one year. As a result, the enforcement of the electricity power sector law that would have forced the Discos to behave themselves and which would have forced government to do what it ought to have done has not taken place.