24 May 2012

Nigeria: Electricity Tariff Hike Won't Fix Power Sector - Amadi

The proposed hike in electricity tariffs which takes effect on June 1, will not fix the power sector unless additional steps are taken to have good governance, chairman of the Nigerian Electricity Regulatory Commission (NERC), Dr Sam Amadi, has warned.

He, however, said the power sector would collapse except the new tariffs which seek to hike cost of electricity by an average of 11 percent are allowed to take effect.

Addressing newsmen yesterday at a civil society roundtable on power sector reform, Amadi said: "The truth is the sector is going to collapse if we don't get this tariffs and if we get this tariffs and do not do more, it will still collapse. That is the message I want to give to the civil society. They shouldn't think about opposing it but work on how to sanitize the system so that when you are paying N1, you will be getting N1 value."

He argued that the existing tariffs in Nigeria are the lowest in the world, except Zambia, and that having a cost reflective tariffs was only a step towards a broader reform to put the Nigerian economy on the path of development.

He said: "For many years, investment has been wasted. Those issues should not be overlooked. Tariffs don't solve the problems of the sector. They only present an opportunity for investors to come and to have the investment that we are in to be amortized over time. The tariffs will not fix corruption, but it is the beginning of sanitizing the system. The question is; 'are we going to bring in good governance to the sector?"

The NERC boss explained that the N50 billion subsidies would only be applied to customers who consume less than 50 kilowatts hour per month irrespective of their places of residence. "It is not an urban/rural divide," he explained.

He therefore said: "this is not the fuel subsidy crisis. This is a process that has been well calibrated. This tariff is cost efficient because people pay a lot in corruption in bribing PHCN. Even if the price for power is N1 per kilowatt hour, you end up paying N500 trying to get simple service. That is why we seek your (Nigerians') support to fight those cabals; those inside and outside so that we can change this sector and give people value."

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