By Abdullahi M. Gulloma and Ezrel Tabiowo, Abuja
President Muhammad Buhari and the President of the Senate, Dr. Bukola Saraki have disagreed on the planned hike of electricity tariff to be paid by Nigerians. The duos spoke at different fora.
While Buhari is insisting that Nigerians should be prepared to pay more for what he described as the core value chain for cost effective tariff, Saraki on the other hand believed Nigerians should get the service “at the cheapest possible cost.”
Buhari said this at the Annual General Meeting of the Manufacturers Association of Nigeria (MAN).
The President, who was represented by Vice President Yemi Osinbajo, said: “One aspect of the problem that I want to speak about, because this also affects manufacturing, is the whole idea of the tariffs. Of course the president of MAN just said that we have one of the most expensive electricity in the world.
“Now, the truth of the matter is that at this point, if we wanted to have a cost effective tariff, the only way is to service that core value chain, the only way is to ensure that we are paying and compensating the value chain -from generation down to distribution- a cost effective tariff.
“You cannot have that cost effective tariff without some pay. At the moment, (when you compare) how much it costs to produce power, and the amount of power that is generated, the losses on account of distribution are significant. In some cases you have up to 40% losses in distribution, and of course it is the DisCos that have to take that burden.
“The GenCos (generating companies) are producing power but they expect to be paid for all the power that they produce. Now, if 40% of this is lost, it means the DisCos cannot collect 40%, but they have to pay for it somehow. So government has to come in and play some kind of role in order to ensure that the whole value chain is paid for.
“But the most important thing is that the cost of power is reflective of costs that have to be borrowed at every stage of the value chain and today the cost of power, if it’s going to be reflective in any way is simply what it is. It will be very difficult indeed, except if we are going introduce yet another subsidy and by the way, a fair amount of that goes on already in the way that government supports the GenCos and the DisCos.
“But I think that we must be ready to accept that for a while, until things stabilize somewhat, tariffs cannot remain at the levels at which they are today, they cannot remain at that level, and that just simply is the truth of the matter. It certainly means that there may be higher costs, but I don’t think that an option of not having power is really what we want. The real issue of course is that at the end of the day, some of the cost goes to the consumer, but a cost reflective tariff is an absolute necessity, otherwise, privatization and all of that simply doesn’t make sense.”
The President also spoke on foreign currency restrictions by the Central Bank of Nigeria (CBN), saying that a review of the CBN restrictions on foreign currency is not imminent.
His words: “I want to make it absolutely clear that the position is not that a review of the CBN restrictions on foreign exchange is imminent. It is a short term measure, not a policy, and as things improve, we will have a discussion about what to do, but certainly not that a review is about to take place.”
Taking a different position however, Senate President Saraki, maintained that as much as Nigerians deserved the best service in terms of electricity delivery, they should get that at the cheapest cost possible.
He spoke while receiving in audience the Chairman of the Nigerian Electricity Regulatory Commission (NERC), Dr. Sam Amadi and his management who were on a courtesy visit to his office in Abuja.
A statement from Saraki’s media quoted him as saying, “more importantly, from our own point of view is that how do we ensure that majority of the owners of the Discos keep to some of the agreements or the commitments they made at the time of purchase. Some of them by the time they were buying these assets have committed to certain investments that were going to be done. The question is, are they on schedule and what is the time frame you see for most of these investments to be in place?
“We are both on the same side which is to ensure that the consumers get value for their money. You are those that work directly with them and it is important you bring to our attention what is necessary to ensure that at the end of the day the consumers, the Nigerian people get the best benefit. The aim at the end of the day is to ensure that every Nigerian get the power and they get it at the cheapest possible cost and those who are responsible for running these units keep to the agreement.
“What we don’t want to see is the impunity where people believe that they can make commitments but not necessarily be held to those commitments and at the end of the day, it is our own people that suffer. Definitely we are going to stamp that out and we are not going to accept that and it is your responsibility to bring that to our notice so that we can be a be able to address that.
“The most important thing again, which I will keep emphasizing is that we must be able to have sanctions for companies that have made commitments and they are not honouring those commitments. They must be held responsible because generally in our private sector businesses, they always try and cut corners and see what they can get away from and I think that is your own responsibility to ensure that that does not happen.”
Earlier, Amadi told the Senate President, that the Commission was doing all it could to eliminate fixed electricity charges, explaining that one of the factors militating against increased power supply is the weak infrastructure in the country.
Amadi said: “We have mandated Discos to find a way to restructure the fixed charge in a way that they also receive their revenue but in a manner that does not unfairly inconvenience or exploit the consumers.
“Recently in some newspapers, some Discos like Eko have indicated that they are not going to levy fixed charge. Some like Ikeja have said that they are going to cut it by 50 per cent in response to Senate’s concern and the instruction we have given them in that respect.
“Our commitment is to try as much as possible to ensure that any form of pricing is fair to consumers and such that to help us to sustain the improvement in the sector”, the NERC Chief said.