The Federal Government revealed that the country’s power
supply was in need of a cost effective tariff.
Vice President Yemi Osinbajo, who disclosed this, said it will be impossible to
sustain the power sector in the country without it.
Osinbajo, who spoke at The Platform, a programme organised
by Covenant Christian Centre, Lagos, said if there was a single reform that
could fundamentally change the narrative of the Nigerian economy, it would be
providing regular power supply.
He said: “One of the key things that no one likes to talk about is that there must be a cost-reflective tariff. Without cost-effective tariff, it will be impossible to sustain the power sector going forward.Many of the private sector companies that invested in the power sector do not have the resources to continuously invest, to service equipment, meters and do other things. That’s one part of the problem.
“By and large, a major problem has been that the private sector had been unable to invest adequately, especially on distribution and metering (everyone having a meter).
“However, the problem is a little more complicated as they complained that the reason for the insufficient fund is because we do not have a cost-effective tariff.“They are paying more for producing power than they are being paid by consumers. That has led to two problems. First, gas, as we all know, is the main feed stock for all our thermal stations and we have more thermal stations than any other type of source of power.
“Gas has to be paid for and those who are producing the gas are now owed large amount of money, because the Generating Companies, GENCOs, are not able to pay them. On the other hand, the generating companies complain that they are not able to pay because the distribution companies are not collecting enough money.“Off course, the Distribution Companies, DISCOs, are saying they are not collecting enough money because the consumers are not paying. So, we have a situation where there is illiquidity in the chain. Thus, there isn’t enough money to service the chain.’’
Osinbajo
noted that the Federal Government has decided to introduce some liquidity into
the chain by what is called payment assurance scheme as a short term measure to
solve the challenges in the sector.
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