A Review of the Nigerian Energy Industry

IFC, others advocate hike in electricity tariff


22 September 2015, Lagos – THE International Finance Corporation, IFC, and other stakeholders in the power sector have called for an increase in electricity tariffs, saying that investment in the sector is being hampered by low tariffs.

These views were expressed at the Powering Africa Nigeria Conference in Abuja, organised by EnergyNet.
Specifically, the IFC Country Manager, Nigeria, Ms. Eme Essien Lore, argued that the current tariff structure in the country is insufficient to cover costs in the sector.

She said: “What we need to see is a clear cut tariff reforms. If we do not have a cost-reflective tariff we cannot invest in the sector. If you do not have a path towards tariff reform we will not have investors.

“This needs to be cleared; if we do not have a clear path towards achieving a cost reflective tariff, we will not have investors in the sector. And if there is no understanding and appreciation of that, there would be no investments in the sector. There must be a cost reflective tariff in other for the sector to be bankable.”

Continuing, she said: “What we need to see from the government now is a path, and what is the path towards achieving a cost-reflective tariff. That is what we are looking for and we expect that with this new government and with the regulator in place that all of these things will come to pass. We are going to partner with the government to make that happen.”

The Chairman, Nigerian Electricity Regulatory Commission, NERC, Dr. Sam Amadi, had recently approved a new tariff from October for the Distribution Companies, DISCOS, for retail consumers.

He also said the Commission is considering the review of the ‘transmission use of the network charge’, saying that the present tariff structure is very low and had served as a disincentive for investments in the sector over the years.

According to him, electricity transmission should be able to pay for itself, irrespective of whatever model the Federal Government adopts in its management going forward.
*Sebastine Obasi & Michael Eboh – Vanguard

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