Sanusi Garba, the Chairman of the Nigeria Electricity Regulatory Commission, stated on Thursday that the Federal Government of Nigeria would require approximately N3.2trn in 2024 to reverse the recent electricity tariff hike.
He emphasized that without a comprehensive sectoral overhaul, including addressing fluctuations in foreign exchange, the challenge of ensuring stable power supply in Nigeria would persist.
During a stakeholders meeting in Abuja convened by the House of Representatives Committee on Power, Garba noted that the current investments in the sector, while praiseworthy, were insufficient to ensure uninterrupted power supply nationwide.
Prior to the recent tariff review, distribution companies were only mandated to settle 10% of their energy bills, leading to a liquidity challenge due to lack of cash flow.
Garba highlighted that the electricity tariff had risen from 55% to 94% between January 2020 and January 2023, with cost reflective tariff projected to reach N184/kWh due to forex unification and inflationary pressures.
He stated, “If no action is taken, it would necessitate the National Assembly and the Executive to allocate about N3.2 trillion for subsidies in 2024.”
Regarding the 2023 subsidy, Garba mentioned that only N185 billion of the N645 billion allocated had been funded, resulting in a funding shortfall of N459.5 billion.
Musiliu Oseni, Vice Chairman of NERC, supported the tariff hike, asserting that it was crucial to prevent a complete collapse of the sector.
The Chairman of the House Committee on Power, Victor Nwokolo (PDP, Delta), explained that the meeting aimed to address the recent tariff increase and the new categorization of electricity consumers.
Nwokolo mentioned, “Further consultations will be held with the Transmission Company of Nigeria and the generation companies in the upcoming week. The industry requires the tariff adjustment for capital to facilitate necessary changes.
“With Nigeria’s population growth, expanded network coverage is essential, necessitating increased funds.
“Currency fluctuations, security threats to power installations, and overhead expenses are escalating challenges faced.
“The committee is yet to reach a decision as more inputs are being sought, including exploring the possibility of selling gas to them in local currency which is crucial for power generation.”
He added, “A resolution from the entire House is necessary to halt the tariff increase; the committee alone cannot make this decision.”