The Minister of Power, Mr. Adebayo Adelabu, disclosed the Federal Government’s need for substantial funding to revive Nigeria’s power sector during a one-day investigative hearing on the recent electricity tariff increases. The hearing, organized by the Senate Committee on Power in Abuja, centered on concerns related to the new tariff structure proposed by the Nigerian Electricity Regulatory Commission (NERC) and implemented by Distribution Companies (DisCos).
Adelabu highlighted the significant financial injection required, estimating the need for $10 billion annually over the next decade to address the sector’s infrastructure needs and stabilize it. However, he acknowledged that such an amount is beyond the current budgetary capabilities of the government, emphasizing the urgency to attract private investment to the sector.
“To sustain the power sector, we must open the market to investors and make it attractive to lenders. The only way it can be made attractive is that there must be commercial pricing,” Adelabu stated. He further explained that without a cost-reflective tariff, attracting investors would be challenging, pointing out that the current subsidy regime has not been funded adequately, leading to significant liabilities owed to Generating Companies (GenCos) and Gas Companies.
The minister also touched on the conditional aspects of the tariff increase, noting that customers who do not receive at least 20 hours of power supply per day would not be subject to the new rates. He assured that the government is committed to ensuring sustainable reforms in the sector and stressed the importance of clearing the outstanding N2.9 trillion subsidy debt to maintain operations across the generation, transmission, and distribution value chain.
Despite the government’s rationale behind the tariff adjustments, the increase has sparked widespread discontent among consumers and lawmakers alike. Senators expressed their concerns about the burden this places on Nigerians, who they feel are already paying for the inefficiencies within the power sector.
Senator Ola Ashiru, Vice Chairman of the committee, criticized the operational inefficiencies and suggested that poor Nigerians need protection, possibly by reversing the tariff increase. Similarly, Senator Solomon Larlong and Senator Adamu Aliero called for more consultations and consideration of palliatives before any tariff adjustments, with Aliero advocating for a complete reversal of the tariff hike, citing a lack of public support.
The hearing also addressed issues beyond tariff increases, such as the failure of certain initiatives like the provision of prepaid meters by the company ZIGLAKS, which received significant funds but did not meet its obligations, according to Senator Eyinnaya Abaribe, chairman of the committee.
As discussions continue, stakeholders from various sectors, including the Nigerian Electricity Regulatory Commission, the Manufacturers Association of Nigeria, and representatives from Generation and Distribution Companies, also presented their perspectives, contributing to a comprehensive dialogue on how best to tackle the ongoing challenges in Nigeria’s power sector.