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Power Firms Seek FG’s Intervention on Tariff

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PHCN Power Plant
  • Power Firms Seek FG’s Intervention on Tariff

To avert an increase of over 200 per cent in electricity tariff payable by residential consumers in the near future, the Federal Government has to intervene in the sector, power distribution companies have said.

According to them, the government’s intervention is vital in order to address the N809bn revenue shortfall in the industry.

They insisted that the intervention could come in form of subsidy to consumers, access to foreign exchange by the companies, as well commercially reasonable financing for the Discos.

The firms explained that they were not willing and could not impose any increase in tariff on consumers, but maintained that to avoid a situation where the consumers would have to pay as high as N70 to N105 per kilowatt-hour as energy charge, the Federal Government must do something.

Currently, the average rate being paid as energy charge by residential consumers across the country is N22.8/KWH, but this may increase soon if nothing is done to address the N809bn revenue shortfall in the power sector, according to the Discos.

The Chief Executive Officer, Association of National Electricity Distributors, the umbrella body for the Discos, Mr. Azu Obiaya, told our correspondent that “the government has a role to play.”

He explained, “There is nowhere in the world where the privatisation of the power sector has succeeded without the government coming in to address shortfalls. However, because we cannot impose any increase on the customers, the government must step in.

“There is a gap in the electricity value chain and that gap must be filled by somebody. But right now, it cannot be pushed on to consumers who are already suffering the effects of a recession. So, clearly, the only person or party that can step into that realm is the government.”

Obiaya noted that the Indian government, from where Nigeria copied its privatisation model, provided about $105bn as subsidies rather than commercial loans to the Discos in New Delhi, and suggested that the Federal Government should think in that direction.

He said, “So, what we are asking them to do is that they should think about how they can help subsidise rates for the consumers, how they can help us with access to finance, access to forex as well as a stabilisation policy, because most of the equipment in this industry are imported.

“Therefore, for emphasis on how they can intervene, they should help us with access to forex, financing at commercially reasonable rates, as well as subsidy to consumers by way of assistance. These issues are significantly important in order not to increase the tariff being paid by consumers.”

Officials of the Nigerian Electricity Regulatory Commission had told our correspondent that they were aware of the request by the Discos to raise tariff or get the government to intervene in the sector, but stressed that the regulator had not given consideration to their plea.

The National Electricity Consumers Advocacy Network had stated that it would never support any move to increase tariff, describing it as “the peak of insensitivity to the Nigerian masses”.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

NLNG Boosts Cooking Gas Production to 1.5 Million Metric Tonnes Annually

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cooking gas cylinder

Nigeria Liquefied Natural Gas Limited (NLNG) has announced a significant milestone in its operations, boosting its annual production of liquefied petroleum gas (LPG), commonly known as cooking gas, to over 1.5 million metric tonnes.

This surge in production underscores NLNG’s commitment to meeting the rising demand for clean cooking energy in Nigeria.

The entirety of NLNG’s 1.5 million tonnes production is now being sold domestically within Nigeria.

Moreover, the company has initiated a landmark shift by starting to supply LPG in naira, moving away from the traditional practice of trading in United States dollars.

This move aligns with calls from stakeholders in the oil and power sectors advocating for naira transactions, especially amidst the challenges posed by currency fluctuations.

During a panel session at the 7th Nigeria International Energy Summit in Abuja, NLNG’s General Manager of Finance, Fatima Adanan, highlighted the company’s dedication to enhancing LPG penetration across the country.

Adanan emphasized NLNG’s vision to make Nigeria a better place by promoting the use of cleaner energy sources like gas.

While NLNG’s production surge is commendable, Adanan acknowledged that Nigeria’s LPG requirements surpass the current output, necessitating imports to bridge the gap.

However, NLNG remains committed to expanding its production capacity to meet the nation’s energy needs and drive increased adoption of LPG as a cleaner cooking fuel.

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Economy

CBN Raises Benchmark Interest Rate by 400 Basis Points to 22.75%

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has raised the benchmark interest rate by 400 basis points to a record 22.75%.

The decision made by the Monetary Policy Committee (MPC) comes amidst rising inflationary pressures and growing uncertainty in Africa’s largest economy.

Nigeria’s inflation rate rose to 29.90% in January 2024, the highest in over two decades while the nation’s unemployment rate quickened to 5% in the third quarter of 2023. Suggesting that the rising costs have continued to drag on both new job creation and the existing ones.

This coupled with a series of policy adjustments implemented by President Bola Ahmed Tinubu has plunged economic productivity and eroded consumer spending as citizens grapple with high fuel prices, electricity tariffs, a record-high foreign exchange rate, and insecurities.

Therefore, it is surprising that the Monetary Policy Committee (MPC) led by the CBN will further increase borrowing costs by 400 basis points at a time when job creation is paramount.

While the economy reportedly grew by 3.46% in the fourth quarter (Q4) of 2023 on the back of robust performance of the services sector, this growth is yet to crystalise as businesses and citizens have taken to the street protest against the harsh economic situation.

Economic experts have started questioning the data from the National Bureau of Statistics (NBS) given its lack of correlation between the data and economic reality.

 

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Economy

President Tinubu Unveils Geometric Power Plant in Aba After 20-Year Wait

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Geometric Power Plant

After two decades of anticipation, President Bola Tinubu, through his representative Vice President Kashim Shettima, inaugurated the long-awaited Geometric Power Plant in Aba, a significant milestone in the city’s quest for reliable electricity supply.

The event, which also saw the commissioning of three rehabilitated roads by Abia State Governor Alex Otti, symbolizes the culmination of years of perseverance and determination to transform Aba’s power landscape.

Addressing the audience, Vice President Shettima hailed the project as a testament to the power of visionary leadership and unwavering commitment to progress.

He said the Geometric Power Plant exemplifies the transformative impact of strategic infrastructure investments on local communities.

Governor Otti echoed similar sentiments, emphasizing the importance of the power project in positioning Aba as a hub for national and international business ventures.

He commended the efforts of Geometric Power Limited while urging them to uphold transparency and avoid exploiting consumers.

The inauguration of the Geometric Power Plant comes amidst growing concerns over Nigeria’s power infrastructure and the need for sustainable solutions to address electricity shortages.

The project, with a capacity of 188MW, holds promise for significant improvements in power supply across Abia State, benefitting nine out of seventeen local government areas.

The Managing Director of Geometric Power Limited, Ben Caven, underscored the scale of investment involved, totaling $800 million.

He highlighted the comprehensive nature of the project, which includes the installation of new power substations and a 27km natural gas pipeline, signaling a comprehensive approach to enhancing Aba’s energy infrastructure.

In conclusion, the inauguration of the Geometric Power Plant represents a transformative moment for Aba, offering renewed hope for economic growth and prosperity powered by reliable electricity supply.

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