Yesterday Babatunde Fashola, the Minister of Power, Works and Housing during his address to lawmakers when he was grilled by the Senate Joint Committee on Labour, Employment and Productivity; Power, Steel Development and Metallurgy, said Federal Government will not go back on the 45% increase in electricity tariff, adding that a reversal will cost over N575 billion.
Fashola who was summoned alongside the executive chairman of Nigerian Electricity Regulatory Commission (NERC), Anthony Acka, following Federal Government’s refusal to halt the new electricity tariff, explained that the new tariff was necessary for the market to survive adding that a number of indices, such as borrowing rate for investors, exchange rate, availability and cost of gas, among others also contributed to the hike.
"One of the reasons why the tariff had to go up was that a major component, a significant number of our power plant depends on gas and 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 four dollars and it was selling for domestic use at one dollar," Fashola said.
The minister said even with the recent hike in electricity tariff, Nigeria was still among countries with the lowest electricity tariffs in Africa and the world, adding that since 2005 when the 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 asked.
Fashola who said the powers to unilaterally increase electricity tariffs had been vested with NERC, added that the same National Assembly that enacted NERC Act cannot exercise control over tariff increment.
The NERC chairman, Anthony Acka, re-echoed the earlier position of the Federal Government that there was no going back on the new electricity tariffs, adding that contrary to claims, Nigeria operated one of the cheapest electricity tariffs in Africa, and that the increment was the only way through which investors could be wooed into the sector.
"We are mandated to ensure that the interest of the consumers are protected. We told the operators to ensure that consumer groups were consulted before the increment."
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