The National Electricity Regulatory Commission (NERC), an independent regulatory body with authority for the regulation of Nigeria’s electric power industry, has revealed plans to overhaul the country’s energy tariff system by 2021 so as to attract investors and improve power supply.
Sanusi Garba, vice chairman of the NERC said this, according to Reuters, while addressing a panel at the Developing Market Associates’ UK-Nigeria Trade and Investment Forum in London. He revealed that increasing tariffs was difficult, given the lack of regular power supply and the relatively few paying customers on the system, where there are currently just eight million customers on the billing platform.
According to him, “The few that are paying are actually paying for others that are not paying,” he said of the current system.
Only about half of the 190 million people in Africa’s most populous country have access to power. The problem has been exacerbated by prices that are capped below what it costs to generate and deliver power.
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Nigeria’s ailing power infrastructure, which forces businesses and households to run costly fuel generators, is often blamed for hobbling growth and is likely to be major issue in campaigning ahead of next February’s presidential election.
Sanusi Garba told the panel at that NERC had devised a “recovery plan” that would fix the tariff issue.
“Under the plan, by 2021, tariffs, regular tariffs, will reach parity with cost-reflective tariffs,” Garba said.
The reset plan, according to the NERC vice chairman would bring in more investors in order to add generation capacity, diversify power sources away from the gas that most of the grid relies on now, expand the transmission system and, crucially, add 10 to 20 million customers to the billing platform.
He said that while investments were currently stalled, the government would soon invite utilities to submit the investments they need so the government can choose the most crucial projects, facilitate outside investment – and hold those who do get the money accountable for what they do with it.
Garba said the potential millions of new customers, was a “tremendous opportunity” for those looking to place money in Nigeria.