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Nigerian power sector requires policy

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By Mercy Kelani

High electricity theft and worsening financial crisis trouble the sector.

Contrary to the statements of the Nigerian Minister of Power, Abubakar Aliyu, that Nigerians are beneficiaries of the cheapest electricity, research has it that more than 100 countries give more affordable electricity than Nigeria. In the last eight years, the current Buhari-led administration increased electricity tariff by about 168 percent. Citizens, in 2015, paid between N16 and N31kWh for electricity usage. Currently, in 2023, a consumer pays between N55kWh to N71kWh for electricity, depending on the category.

Despite the high cost of electricity, power supplies remain unsteady and many Nigerians pay mandatory bills for unavailable power as they depend on other power generating means for household and commercial supply. The country suffers high electricity theft, rising financial crisis in the power industry and estimated billing. Despite all these challenges, about nine Federal Government agencies and ministries owe distribution companies about N75 billion accrued between 2015 and 2020. If N8 billion is paid by the government as stated in the current budget, the incoming administration will bear a N67 billion electricity debt.

Out of 230 countries with the cheapest electricity, Nigeria ranks 109.

Cable, a UK-based research company which does measurement of electricity bills across the world, recently cited Libya, Angola, Sudan, Kyrgyzstan and Zimbabwe as the leading five countries with the most affordable cost of electricity. The research company measured about 230 countries, among which Nigeria was the 109th country on the list of countries with the cheapest electricity. According to the research, there is a projection that the average electricity tariff should be N56 for one kilowatt per hour (kWh).

According to the Nigerian Electricity Regulatory Commission Order 142 released in January 2015, it was revealed that residential electricity consumers paid between N16 to N31 for one kWh, commercial users paid between N23 to N29 while industrial consumers paid between N23 to N31 for one kWh. The projection of NERC asserts that no electricity consumers in Nigeria should pay over N45 for one kWh between 2015 and 2024, but changing economic realities has made the tariff increase by over 150 percent.

Implementation of legal provisions to address electricity theft.

Former President of Chartered Institute of Bankers of Nigeria and Professor of Economics at Babcock University, Segun Ajibola, stated that the comparison of local prices of electricity between Nigeria and other countries is biased. He emphasized the need to firstly compare domestic incomes — wages and salaries — with international ones. He asserted that the minimum wage in Nigeria is regarded as one of the lowest across the world, despite the non-stop depreciation in the value of the country’s currency.

Resultantly, Nigeria is incapable of paying for such an essential service in the world. Ajibola stressed the inefficiency of working on reducing the price of the services alone as the actual income of consumers need to be improved to provide a balanced equation. In order to deal with electricity theft in the country, he added that the solution to electricity theft is that the industry should implement the legal provisions against electricity theft and punish individuals and organizations caught in the act of theft.

Power is an economic commodity and should not be a social commodity.

Former Chairman of NERC, Sam Amadi, also emphasized the need for sound policies that will attract investment in finance and technical ability, and eradicate existing risks. Public-private partnership consultant, Joseph Tsavsar, added that accessing power through other means than public power supply is expensive and can only be corrected by appropriate policy implementation. Across the world, power is regarded as an economic commodity that ensures sustainability. This sustainable growth ends the moment power becomes a social commodity.

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