Govt unveils N100b electricity subsidy, new tariff begins today

THE Federal Government yesterday unveiled a N100 billion electricity subsidy, as a new tariff regime begins in the sector today.

In a document issued by the Minister of Power, Barth Nnaji, in Abuja yesterday, he observed that the government had provided a N50 billion electricity subsidy in this year’s budget and the same amount in next year’s fiscal plan.

He said: “The government has provided for a N50 billion subsidy in this year’s budget and N50 billion subsidy in next year’s budget. There will be cross subsidy from 2014. This administration and, indeed, every government in the world, has a moral responsibility to protect the weak and poor in our midst. It is important to clarify here the difference between subsidy on petroleum products and subsidy on electricity usage. While that of electricity is production, which is designed to enhance socio-economic progress that of petroleum products is consumption subsidy. It is also important to point out that unlike the petroleum subsidy; there is no cash involvement in electricity subsidy. The latter subsidy merely shields the poor from high payment.”

He added: “The R3 customers, who are right consumers, will notice a substantial increase in tariff, though not up to the fabled 88 per cent. Different studies have shown that Nigerians are willing to pay a little higher if only they are assured of regular and quality power. Paying a little higher for electricity is far cheaper than the cost of self- generation, to say nothing about noise pollution and emission of carbon monoxide, which has led to whole families being wiped out in their sleep.”

In accordance with the Multi Year Tariff Order (MYTO) as contained in the Electricity Power Sector Reform Act 2005, the country’s new electricity tariff regime takes off today.

Fact sheets obtained from the Ministry of Power and the Nigerian Electricity Regulatory Commission (NERC) stressed that with a new tariff coming into force today, utility operators should now be able to pay for gas and power supplies promptly.

The Chairman of NERC, Sam Amadi, said in a fact sheet released yesterday: “The new electricity tariff is established to ensure stable power supply and guarantee efficient customer service delivery in Nigeria. The tariff is structured to attain cost reflective pricing that will ensure private sector investment in the generation, distribution and transmission of electric power in the country. Security of the private sector investment will guarantee the desired availability, reliability and stability in electricity supply and efficiency in customer service delivery.

“With stable power supply, businesses will thrive and our economy will flourish. Small and medium scale enterprises will once again have the electricity they need to keep their businesses running. Hairdressers, vulcanisers, barbers and other small-scale entrepreneurships will no longer have to depend on generators while bigger commercial and industrial ventures will considerably reduce their cost of doing business leading to a general reduction in the cost of goods and services.”

He stressed the need to encourage private sector investors to come to the electricity sector, stressing that the private investors were central to the reforms in the sector.