Immediate consequences of the Senate’s directive to the Nigeria Electricity Regulatory Commission and other stakeholders to reverse electricity tariff increment have been spelt out.
The Association of Nigerian Electricity Distributors, ANED, has warned that with suspension of the new electricity tariff would come loss of employment for about 50, 000 Nigerians and the country may be thrown into a blackout in the near future.
Senate had asked the Nigeria Electricity Regulatory Commission, NERC, Federal Ministry of Power and Electricity Distribution Companies, DISCOs, to suspend the implementation of the 45 per cent increment on electricity tariffs and revert to status quo. The lawmakers also directed its committees on labour and power to organise a public hearing, involving all stakeholders on the matter with a view to arriving at an appropriate pricing of electricity tariffs in the country.
The Discos, in a statement signed by Executive Director, Advocacy and Research, Sunday Oduntan, stated that a market priced tariff is a fundamental requirement under the agreements signed between operators in the Nigerian Electricity Supply Industry, NESI, and the Bureau for Public Enterprises, BPE.
He stressed that the absence of a market priced tariff creates the possibility of performance failure by operators. According to ANED, the suspension of the new tariff order would not only raise concern on the sanctity of the contract, but would also bring about failure of the industry, a price, the group noted, the government could ill-afford in these times of dire economic challenges. ANED in the statement also reiterated that market priced tariff was critical to address decades of under-investment such as the 5 million metering gap in the sector.
“World-wide, electricity reforms have always been tied to increased investment, resulting in improved production efficiency. Such investment is predicated on access to capital which will be jeopardised in the absence of a market priced tariff.
“The absence of a market priced tariff will endanger the viability of the entire value-chain of distributors, generators, transmission and gas suppliers, resulting in the failure of the sector. “As the upstream operators will not receive required payment (Dis- Cos only receive 25 per cent of the revenues associated with the tariff).
“Failure of the sector will result in, amongst other things, loss of employment and livelihood for approximately 50,000 Nigerians, indirect job losses from factory and other business closures, possibly in the millions; and a related outcome of discouraging further investments in the development of gas reserves and production for local consumption;
“And expected performance improvement, with appropriate investment, on the other hand, will lead to a reduction of tariffs in subsequent years. This is empirically supported. “Fellow Nigerians, suspending the implementation of the tariff will leave us in continued darkness, with diminished and no future prospects of growth of our economy,” the statement said.