23 October 2008

Nigeria: FG to Introduce New Electricity Tariff in 2009

Abuja — The Federal Government has set machinery in motion to introduce new electricity tariff that is to serve as incentive for private sector participation in the power sector.

The Minister of Finance, Samsudeen Usman said on Thursday at the 14th Nigerian Economic Summit holding in Abuja, that that the new tariff would be introduced in phases from next year and would be extended to 2011.

"The increase would be marginal till 2011 when the price would have risen to N11 per kilowatt" said the minister, adding that the increment will be justified as it would be based on increase in quality of electricity generation and supply in the country.

Electricity consumers at present pay an average of N4 to N6 per kilowatt for single and double phase meters.

The Federal Government is envisaging that the current generation which stands at about 3,500 mw would jack up to 6,000 mw by 2010 and that by the time the new tariff is introduced, electricity consumers would have derived maximum benefit from it

Usman said as part of the efforts to encourage private investment in the power sector, government has earmarked over N120 billion in this year's supplementary and 2009 budgets, adding that the fund would be used to cushion the effect of poor electricity pricing till 2011 when the actual tariff of N11 per kilowatts would be achieved.

Speaking in one of the sessions on infrastructure development, the Managing Director of Geometric Power Limited, Prof Barth Nnaji disclosed that over 20,000 mega watts are in demand in Nigeria while only between 25 and 30 per cent is met at any time. He noted that firms and households source independent power at exorbitant cost.

He called for public private partnership in the funding and management of the nation's power sector, stressing that government alone cannot finance the needed improvements requiring $50bn over the next 10 years

Nnaji attributed the present deplorable state of the power sector to the failure of state monopoly on generation, transmission and distribution with no accountability to the public.

He said "every time we present Nigeria 's power problem to the World Bank in the U.S ; they always tell us "Oh they (Nigerian government) said the same thing 20 years ago"

Nnaji said Nigeria should take a cue from countries like Russia and India that were once in the present position Nigeria has found itself but took the bull by the horn to wriggle them out of the poor electricity supply to become big economies today.

World Bank's Country Director for Nigeria, Mr. Onno Ruhl, urged the Nigerian government to move swiftly to action and stop further rhetoric over investment in the power sector.

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