Electricity tariff: Read what FG revealed to the Senate today
– Babatunde Fashola, the Minister of Power, Works and Housing was present at the National Assembly today
– He came to brief the Senate committees on labour and power on the new electricity tariff
– Fashola explained that the new tariff cannot be reversed
Babatunde Raji Fashola (SAN), the Minister of Power, Works and Housing
The federal government on Tuesday, May 31, said that there would be no going back on the 45 per cent increase in electricity tariff, stressing that a reversal would cost it over N575 billion.
Babatunde Fashola, the Minister of power, works and housing disclosed in Abuja while briefing the Senate committees on labour and power during a public hearing on the new electricity tariff.
The Nigeria Electricity Regulatory Commission ( NERC) in January, announced a 45 per cent increment in electricity tariff.
The Senate after considering a motion at plenary in January, had directed that the tariff be reversed to enable the Senate conclude hearing on the case.
However, the minister explained that the new tariff could not be reversed as it was necessary for the market to survive.
READ ALSO: New electricity tariff: Fashola justifies increment
He said that a number of indices like borrowing rate for the investors, exchange rate , availability and cost of gas, among others also contributed to the hike.
“One of the reasons why the tariff has go up was that a major component, a significant number of our power plant depends on gas out of about 26 power plants that we have only about three are hydro.
“We were heavily dependent on gas, people were exporting gas because gas was selling outside the country at $4 and it was selling for domestic use at $1″, he said.
He said that even with the recent hike in electricity tariff, Nigeria was still among countries with the lowest electricity tariffs in Africa and the world.
Fashola added that since 2005 when power privatization process started till 2013 when it was concluded, every segment of government was involved and would share the blame if there was any failure.
“Enabling laws for the process were passed by the National Assembly in 2005 , the process completed by the Executive in 2013: if the process was bad, where was oversight?, he queried.
He however pleaded with the lawmakers and Nigerians to be more patient with government and investors on the process as three years is not enough to judge its success or failure.
Explaining the non-implementation of the directive by Senate to reverse the tariff, Mr Anthony Akah, the acting chairman, NERC said that the directive would have created avoidable setbacks in the sector.
He said that if the directive were implemented, a market gap of about N575 billion would have been created which would have compounded the initial market gap of N187 billion the take off tariff slammed on investors.
He said that the NERC was also hindered by a court order, gotten by six generating and distribution companies had taken NERC to court over the tariff hike.
He said that the commission could also not easily reverse the tariff as the process was in compliance with section 76 (8) of the Act guiding the operations of the commission.
READ ALSO: Senate directs NERC to suspend increase in electricity tariff
But the joint committee insisted that it was unacceptable for Nigerians to be paying so much, yet have limited power supply.
The committee adjourned the public hearing to Wednesday.
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