PHOTO CAPTION L - R: Chief Technical Officer, Egbin Power Plant, Mr Gbadamosi Sikiru Olatunde; Chairman, Nigerian Electricity Regulatory Commission, Sanusi Garba; Chairman, House of Representatives Committee on Power, Honourable Victor Nwokolo and his Deputy, Honourable Joshua Gana during a facility tour of Egbin Power Plant by the Committee members in Lagos, recently.
Nigerians face rapid electricity tariff hikes
PHOTO CAPTION
L – R: Chief Technical Officer, Egbin Power Plant, Mr Gbadamosi Sikiru Olatunde; Chairman, Nigerian Electricity Regulatory Commission, Sanusi Garba; Chairman, House of Representatives Committee on Power, Honourable Victor Nwokolo and his Deputy, Honourable Joshua Gana during a facility tour of Egbin Power Plant by the Committee members in Lagos, recently.
It is no longer possible for consumers of electricity in the country to predict their monthly bills following rapid changes in tariff.
The Oracle Today reports that the electricity distribution companies which supply power to homes and businesses in the country have since January activated monthly tariff reviews and possible increase in bills.
It was gathered that the adjustments which are to be supervised by the National Electricity Regulatory Commission (NERC) come in response to the prevailing fall in the value of the Naira at the local foreign exchange market.
The regular tariff changes, we learnt, trails the galloping inflationary trends since the new administration of the federal government pulled all cost triggers in the economy.
The scenario posts even more gloomy shadows with plans to increase domestic natural gas prices for the power sector.
Sources close to the Ministry of Power told our correspondents that government gave consent to the regular tariff reviews for both electricity and natural gas in response to acute supply shortages wreaking distress on the existing gas-to-power programme.
According to our sources, mass commercial and financial distress spreading across the downstream power sector has also contributed to the urgency in effecting tariff correction in the sector where piling debts have toppled the N3.0 trillion mark. Over 60 percent of the debt is owed the gas sector which fires over 80 percent of Nigeria’s total electricity generation mix.
Our sources disclosed that only paltry 12 percent of total supply invoices from the upstream power sector was settled by the distribution companies which are responsible for market returns for all players in the government’s gas-to-power programme.
With the prevailing foreign exchange rates for the Naira, runaway inflation and piling debts; the generation companies and their gas suppliers are in serious financial loss pressure.
The industry projects average monthly gap in market returns to reach N3.11 trillion in 2024 at a gas price of $2.18 per 1000 standard cubic feet at domestic market value of N1496 to a dollar.
With most of the distribution companies already distressed and their electricity supply services continuously worsening, pundits predict that overall industry performance would hit the floor unless there is urgent government intervention in dismantling existing debts.
“Services are going down under the weight of inflation and foreign exchange cost; so, tariff shortfalls are going to widen to N625 billion in March unless there is timely disbursement of the approved 2024 power subsidy to settle market invoices,” our source stated.
