The Minister of Power, Adebayo Adelabu has called on the Federal government to transit fully to cost-reflective tariffs, raising eyebrows amid concerns over subsidy funding.
He noted that if there’s a commitment to subsidy, it must be adequately funded, noting that if government isn’t prepared to allocate funds for subsidy, it’s more prudent for a transition to a tariff system that fully reflects the costs involved.
He made the call during his visit to the power plants in Ogun and Ondo state on Wednesday. Adelabu, who reiterated the significant challenge of liquidity in the sector, emphasised that it has resulted in substantial debts being owed power generating companies (GenCos), noting that this financial strain has made it difficult for GenCos to fulfill payments to gas suppliers, creating a cycle where unpaid suppliers are hesitant to provide regular gas to power plants.
He pledged that he would do everything within his capacity to ensure parts of the outstanding debts of the GenCos is paid which would enable them also pay their gas suppliers.
“As a country, do we want to continue to pay for the real price of power, which is no longer cheap, as it is today throughout West Africa.
Nigeria still pay the lowest tariff for power supply, compared to Benin Republic, Ghana, Cote’d Ivoire, Niger and the likes. They pay almost more than double what we pay presently.”
“We have to decide as a nation that should we migrate to a full cost reflective tariff? And let those that can afford power, pay for it, a lot of businesses that are actually off grid today pay more than a cost reflective tariff but for those that cannot fully afford the tariff there is a way the government can come to their assistance and support by way of rural electrification which will be directly funded by the government,” he said.
Also, the minister said the 25 per cent operational capacity of Olorunsogo and Omotosho power plants is due to shortage of gas amongst other reasons.
Olorunsogo having a 750MW combined cycle power plant comprising of four has turbines of 125MW installed capacity each and two steam turbines of installed capacity of 125MW each has an operational capacity of 25 per cent due to gas constraints.
Adelabu, dissatisfied with the GenCos under capacity, stated his intention to collaborate with the companies’ management to discuss ways for them to operate effectively, seeking assistance from the federal government to enhance their operational capacity and ultimately improve power supply to the Distribution companies (DisCos).
He mentioned organizing a roundtable meeting and collaborating with the Minister of State for Gas to explore effective ways to address the irregular gas supply to these plants, which isa primary factor contributing to their underutilization.
“What Nigerians have experienced in the past three weeks in terms of drop in supply of electricity nationwide is going to improve very soon as it’s a temporary situation which is a result of shortage in gas supply to the power generating companies which is being worked on.
“In few days, we are going to pay the major part of the debt and I believe that gas supply will improve to the power generating companies and power supply to the entire nation will also improve,” he said.
Also, Managing Director and the Chief Executive Officer,Niger Delta Power Holding Company Ltd (NDPHC), Chiedu Ugbo, mentioned that the plants possess significant technical reliability and are crucial national assets. Given Nigeria’s demand for electricity, there is no justification for keeping them inactive.
Ugbo said that the company has commenced a program tagged “Light Up Nigeria ” which was aimed in attracting industrial cluster who are not on the grid by providing them electricity at cost reflective tariff through distribution companies.
