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Tinubu Stops Electricity Tariff Hike …Says Subsidy Must Be Paid

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12 months ago

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The Minister of Power, Adebayo Adelabu, on Wednesday, revealed that President Bola Tinubu recently stopped the hike in electricity tariff and insisted that subsidy be paid on power consumed nationwide.
According to the Minister, President Tinubu’s administration would investigate the legality of the five-year license extension given to privatized power distribution and generation companies.

Adelabu revealed that the operating licenses of the firms would expire on October 31, 2023.
The minister during a press briefing in Abuja, warned that he would sack any non-performing chief executive in agencies under the power ministry if their non-performance would make him lose his job as minister.
Speaking on the call for a cost-reflective tariff, which would lead to a hike in the amount payable for power, Adelabu said, “The power sector is an industry that is very sensitive to any leader.
“You cannot jump overnight and implement the cost-reflective tariff. I can tell you that till today the government still subsidises power. The tariff should have been raised months back, but Mr President said until we are able to achieve regular and incremental power supply we can’t touch the tariff.
“So there is a gap between the cost-reflective tariff that we are supposed to charge and the allowed tariff. That huge gap the government is still handling as a subsidy. This affects liquidity in the system, and investments and causes so many constraints.
“Now, I never said that it is not yet time to charge a cost-reflective tariff. Rather, I said cost reflective tariff is supposed to have been implemented months ago because it is the source of liquidity to the system.
“But for political reasons and empathy, you cannot cause additional burden on Nigerians. We just had the removal of fuel subsidy, we are talking about the exchange rate skyrocketing, galloping inflation and so many others that bring hardship to the people.
“And Mr President is trying to relieve this hardship through various forms of palliatives. So it is not politically expedient and reasonable to now implement a tariff that is more like dumping the existing tariff.
“We are now paying about N70 (per kilowatt-hour), and it can never be less than N130 or N140 at the exchange rate of today if we are to implement a cost-reflective tariff. Because part of the reasons for an increased tariff is the price of gas, which is paid in dollars.”
He explained that as of today, 75 to 80 percent of Nigeria’s power is from gas power plants, “and their raw material is gas. So, once the exchange rate goes up, the cost of gas also goes up and it affects the tariff.”
He, however, pointed out that the tariff would be increased at the appropriate time, which would be after a lot of sensitization and communication with the public, adding that there must also be an assured incremental and regular supply.
The minister said the about 4,000 megawatts of power generation in Nigeria was shameful and unacceptable, noting that efforts were being made to increase this.
He stressed that any senior official in the ministry and its agencies who fails to deliver would have to leave, as the President had told his ministers that they must perform or be fired.
Adelabu said, “I’m using this medium to tell my colleagues who will work with me that if your activity is not supporting my retention, you’ll leave before me. Because for me, I don’t wait to be sacked, the moment I’m not performing, I’ll leave honorably.
“But before I leave I’ll explore every opportunity to ensure I deliver because this is not personal, this is national, and national interest must prevail. So all the players in the power sector must support my vision so that I can support Mr President’s vision.”
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The minister maintained that the privatization of the power sector in 2013 was a mistake, stressing that commercialization should have been better.
He, however, noted that the Federal Government could still take control of the power distribution companies despite owning a 40 percent stake in the various firms.
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Adelabu said the government might also carry out a review of the territorial coverage of the Discos, as most of them were handling so large territories and were delivering below expectations.
The minister said when he resumed office, the licenses of the privatized power firms which he saw were for 2013 to 2023, but along the line, he got to hear that there was an extension by another five years.
He said this was being investigated, adding that the government would sit with the private sector operators to agree on a performance bond that the power firms must meet.
Adelabu added, “That is what actually matters to us now, but I can tell you that I’ve ordered an investigation into the extension of the licenses, (which was) not by this administration. So we want to investigate what truly happened.
“How legally correct was it, how contractually correct was the extension?.”
Speaking on whether Nigeria had started supplying power to Niger Republic, Adelabu said, “We have not started. We are just messengers, when they ask us to resume, we will resume.”
He said the situation in the affected country was still being monitored by the Federal Government.
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