The Federal Government (FG) has said electricity generation will increase from the present 4,900 megawatts (MW) to 7,000 MW in two years time on a budget of $3 billion. It however added that, by December this year, it plans to end all forms of electricity subsidies.
The spending is expected to increase power being wheeled by the Transmission Company of Nigeria (TCN) from the current 4,900MW to at least 7,000MW.
Ahmad Zakari, Special Adviser to the the President who spoke during a webinar hosted by the Abuja Chamber of Commerce and Industry (ACCI) said that following the $500 million loans the government secured from the World Bank earlier this year, while expecting another facility from the African Development Bank (AfDB). According to him, the gesture is a demonstration of confidence in the reforms being currently made in the sector.
The collection efficiency of the Distribution Companies (Discos), has significantly improved since the CBN started warehousing the funds. Zakari explained, adding, “With this enhanced metering on the service-based tariff, we can see the Nigerian electricity supply industry generating over N100 billion in the near to mid-term. This is very impressive.”
“The hypothesis that we have is that if you enhance payment discipline through metering the population, revenue will go up. We have proven that,” he stated.
Zakari said that the current administration was focused on moving from the traditional way of funding subsidies or using the liquidity in the sector to fund consumption. Rather, he said, the subsidy budget would go into infrastructure that would ultimately lead to growth.
“People say if you eliminate subsidies you are going to have poor people or the vulnerable people pay more. But we argue that the only reason the power price in Nigeria is high is that we do not generate enough.
“If you generate 10 gigawatts of power, the tariff will be half of what it is now. Keeping the prices officially low is not the approach; increasing delivery power is the approach that will effectively get the same output, which is, making the citizen pay lower,” said Zakari.
