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Privatisation : FG expends N1.7trn on tariff shortfalls

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The federal government hinted that it has spent almost 1.7 trillion supplementing tariff shortfalls in the wake of challenges with the power sector privatisation exercise of 2013.

President Muhammadu Buhari gave the hint in his address at the first year ministerial performance review retreat held on Monday as he said the recent service-based tariff adjustment by the electricity distribution companies, Discos had been a source of concern.

According to him, reason the government had kept supporting the largely privatised electricity industry with intervention funds was that they had been “very unhappy” about the quality of service given by the Discos.

He however said government can no longer continue to fund the shortfalls as it would be “grossly irresponsible” to borrow to subsidise a generation and distribution which are both privatised.

“But we also have a duty to ensure that the large majority of those who cannot afford to pay cost-reflective tariffs are protected from increases. NERC, the industry regulator, therefore, approved that tariff adjustments had to be made but only on the basis of guaranteed improvement in service”.

“Under this new arrangement, only customers who are guaranteed a minimum of 12hours of power and above can have their tariffs adjusted. Those who get less than 12 hours supply, or the Band D and E Customers must be maintained on lifeline tariffs, meaning that they will experience no increase”.

However, he pointed out that there are many constraints to poor power supply including poor transmission capacity and distribution capacity.

“I have already signed off on the first phase of the Siemens project to address many of these issues”, he said.

He said his administration had also taken notice of the complaints about arbitrary estimated billing.

“Accordingly, a mass metering program is being undertaken to provide meters for over 5 million Nigerians, largely driven by preferred procurement from local manufacturers – creating thousands of jobs in the process”.

“NERC has also committed to strictly enforcing the capping regulation which will ensure that unmetered customers are not charged beyond the metered customers in their neighbourhood. In other words, no more estimated Billings”, he said.

In addressing the power problems he said since most Nigerians are not connected to electricity “at all”, as part of the Economic Sustainability Plan, a providing for solar home systems to 5 million Nigerian households in the next 12 months has been earmarked.

“We have already begun the process of providing financing support through the CBN for manufacturers and retailers of Off-Grid Solar Home Systems and Mini-Grids who are to provide the systems”.

“The Five million systems under the ESP’s Solar Power Strategy will produce 250,000 jobs and impact up to 25 million beneficiaries through the installation This means that more Nigerians will have access to electricity via a reliable and sustainable solar system”.

According to him, the support to Solar Home System manufacturers and the bulk procurement of local meters will create over 300,000 local jobs while ensuring that government sets Nigeria on a path to full electrification.

“The tariff review is not about the increase, which will only affect the top electricity consumers, but establishing a system which will definitely lead to improved service for all at a fair and reasonable price”.

He explained that the review of service-based electricity tariffs was scheduled to start at the beginning of July but was put on hold to enable further studies and proper arrangements to be made.

“This government is not insensitive to the current economic difficulties our people are going through and the very tough economic situation we face as a nation, and we certainly will not inflict hardship on our people. But we are convinced that if we stay focused on our plans, brighter and more prosperous days will come soon. Ministers and senior o

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