In a bid to ensure adequate power supply for Nigerians, the Nigerian Electricity Regulatory Commission (NERC) on Wednesday, sought for subsidy for power firms and reflective tariff.
It said this was imperative as there was little the commission could do considering the liquidity problem in the power sector.
Acting Chairman/Chief Executive of NERC, Dr. Tony Akah, made the call in his presentation to the Senate Committee on Privatisation at the commission’s headquarters in Abuja.
According to him, the financial shortfall in the sector would be best tackled if a cost reflective tariff or subsidy is provided for power operators.
“So the challenge we have as regulated here is that we don’t know which other miracle to do, because in absence of subsidy coming in, in absence of other mechanism coming in, we are bound under the law to provide a tariff that will recover the cost of investments.
“And in the absence of that, there is no incentive for the players in the market to come up and give you power.
“If we can have subsidy in the petroleum sector even up till today why can’t we figure out a mechanism to support the power sector?,” he queried.
Akah further stated that the destruction of gas pipelines was also causing a huge loss to the power sector, as the financial performances of many electricity firms had been badly affected due to the menace.
He said:”I always say that private players are there to provide services, at the same time make a fair return on investment. This is fair return on investment either via the right tariff, or tariff that is highly subsidised by the government, or through other incentives that could reduce the cost of investment.
This could be through gas, tax holidays and many more. But I know that the Federal Government at this point in time is considering various options to see how it can mitigate any possible rate hike.”
However, the call was rejected by members of the Senate Committee even as they stated that the issuance of licenses to more power investors would break the monopoly of current operators.
The Committee’s Chairman, Mr. Ben Bruce, who noted that most salary earners in Nigeria have not had their wages increased in the past one year, said,”yet power firms are calling for a 200 per cent hike in rates because of forex challenges and inflation.
“But those same factors affect me as a businessman; they are not exclusive to the power sector. I’ve not been able to increase my rates but I’ve been able to survive. So also many other businesses in Nigeria,” he said.
He said the government should not create monopolies with power generation and distribution companies, adding that although the country does not have a single company monopolising the sector, it now has several monopolies in different states.
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