……..confirms removal of N600bn annual subsidy
Nigerian Electricity Regulatory Commission (NERC) has said that a subsidy on power projected to cost N600 billion for the year has been halted.
This effectively confirms why Nigerian has raised its electricity tariff, even as authorities said the national grid collapsed, the country’s power crisis got worse for the past two week.
While explaining the situation to pressmen in Abuja last weekend, NERC chairman, Sanusi Garba, said that subsidies payable by some consumers in some franchise areas of the distribution companies were actually reduced.
According to him, subsidy on electricity was a policy issue of the Federal Government that had 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,” he said.
The NERC chairman said the February 1 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.
He reiterated that the World Bank and the International Monetary Fund (IMF) had both insisted that the Nigerian government should end subsidies on electricity and petroleum products as a means of reducing national budget deficit.
Nigeria’s national grid had collapsed twice last week, with many states thrown into darkness. The 2013 unbundling of Nigeria’s power sector that created distribution companies, generation companies, the Transmission Company of Nigeria (TCN) and the Nigerian Bulk Electricity Trading Company (NBETC), have been severally criticized as flawed due to the lingering shortcomings
Operators in the industry blame inadequate funding for the persistent challenges that have affected the industry negatively. 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.
Chidi Ekpewerechi
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