*Says determining electricity tariff out of government control
08 June 2016, Sweetcrude, Abuja – The Minister of Power, Works and Housing, Mr. Babatunde Fashola has said it would be difficult for the Federal government to arbitrarily punish power generation and distribution companies for operational inefficiencies in the electricity system because the government had largely failed to provide them with the right tools to work with.
Fashola, who stated this in a statement to the Senate joint committees of labour, power, and steel development during a public hearing on electricity tariff hike, a copy of which was obtained by our correspondent in Abuja, explained that there are operational challenges the Gencos and Discos contend with and which the government has not addressed.
He said as a responsible government that inherited a legally-backed transaction, which gave majority shareholding to private investors in the Gencos and Discos, it would not act arbitrarily but must follow due process if it wanted to punish their inefficiencies, to avoid harmful court cases.
According to the statement, Fashola wondered how Discos could be sanctioned when they were not supported to improve their operations.
He added that in this instance, the government lacks the moral right to sanction them because many of its agencies still owe huge sums of money for electricity they consumed over the years.
He also spoke about the protracted controversy over the recent tariff raise, saying that contrary to insinuations, the new rates were not arrived at arbitrarily because the conditions for its periodic review are specified in the Electricity Power Sector Reform Act 2005.
The minister also asked all concerned stakeholders to consider exploring the content of the Act to identify the provisions for adjustment as the tariff has not been irreversibly fixed.
“The processes of determining tariffs are clearly outside the control of government,” Fashola said, adding that with the liquidation of the Power Holding Company of Nigeria (PHCN), the government has become a minority shareholder in the business of power, thus handing over the task of regulation of the sector to the Nigerian Electricity Regulatory Commission (NERC).
The statement noted that he requested for time for the sector to withstand shocks presently being experienced in its transition period, and then asked, “The transition period of 2013 to 2016 is it a long time to wait in a sector that has been badly managed for upward of 60 years?”
He equally insisted that with the introduction of a cost reflective tariff, a lot of gains have been made in regaining the confidence of the market confidence, even though an appreciable improvement was yet to be noticed.
This, he added would improve the market’s liquidity and attract more investors to leverage on such development.
Similarly, the Permanent Secretary in the ministry, Mr. Louis Edozien explained that a more realistic overview of the country’s power situation was to see it as a national problem that requires all stakeholders to know and play their roles accordingly, rather than engage in blame games.
Edozien urged the parliament to support the sector with proactive legislations and over-sight responsibilities. He added that the government plans to provide meters to all customers designated as Residence-2 (R-2) and R-3 by the end of next year.