Business
Cost-reflective tariff key to achieving 24-hour electricity – FG
BY EMEKA EJERE
The Minister of Power, Adebayo Adelabu, has identified adoption of cost-reflective tariff as a sure way of attracting necessary investments and ensuring the sustainability of the nation’s power sector.
The minister spoke through his Chief Technical Adviser, Adedayo Olowoniyi, at the PwC’s Annual Power and Utilities Roundtable, with the theme ‘Reigniting Hope in Nigeria’s Electric Power Sector,’ held in Lagos on Thursday.
According to the minister, only a commercially viable power sector can attract the level of investment that can make uninterrupted power supply possible.
Adelabu acknowledged the reluctance to adopt cost-reflective tariffs but argued that it is a necessary step for achieving 24-hour electricity and universal access.
“We cannot dance around the fact that a market that does not create a line of sight of return for investors will not get investment,” Adelabu noted.
He stated that the Ministry of Power, in collaboration with PricewaterhouseCoopers, has developed a draft Integrated National Electricity Policy aimed at addressing critical challenges in Nigeria’s power sector.
“PwC’s support has been instrumental in drafting the Integrated National Electricity Policy, which will guide the sector’s strategic implementation. The policy aims to foster market discipline, improve energy delivery efficiency, and ensure subsidies benefit the most vulnerable,” he stated.
Adelabu pointed out the challenges of vandalism, ageing infrastructure, and inefficiencies in the electricity value chain, which have hampered progress, revealing that the Transmission Company of Nigeria (TCN) spent nearly N10bn in six months repairing vandalized towers.
Also speaking, Commissioner of Planning, Research, and Strategy at Nigerian Electricity Regulatory Commission (NERC), Dr Yusuf Ali, disclosed that the Federal Government would spend about N2.4tn on power subsidies before the end of this year.
Ali, who was the keynote speaker, explained that the subsidy had fluctuated due to foreign exchange challenges and tariff adjustments.
“As of November, the subsidy amount stood at N1.9tn, but with current trends, the monthly subsidy for electricity is expected to reach N260bn in December,” Ali stated.
He emphasised that the N2.4tn is an annual estimate that could adjust depending on the monthly cost-benefit tariff.
“Every month, we calculate the difference between the cost-reflective tariff and the approved tariff to determine the subsidy,” he explained.
The round table also featured a panel discussion, with notable industry experts as panelists.
They include Mr. Deolu Ijose, Managing Director/ Chief Executive Officer, Benin Electric Distribution Company (BEDC), Mr. Johnson Akinnawo, Acting MD/CEO Nigerian Bulk Electricity Trading Plc. (NBET), Mr. Akin Akinfemiwa, Director and Chief Executive Officer, Geregu Power Plc represented by Mr. Akin Olagbende, as well as Dr. Yusuf Ali