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Fashola’s failed attempt to sell electricity tariff hike

By Olasunkanmi Akoni

Following a nationwide protest which commenced on February 1, by the Nigeria Labour Congress and Trade Union Congress against the increase in electricity tariffs, demanding an immediate reversal of electricity tariff hike, the Minister for Works Power and Housing, Mr Babatunde Fashola, last Monday, chaired the second monthly meeting of operators in the power sector in Lagos with the Electricity Distribution Companies, EDCs, promising more aggressive commitment to metering.

fasholaThe meeting held at the Alagbon Transmission and Distribution Complex, Ikoyi, Lagos had in attendance representatives of all the Power Generation Companies (Gencos), Distribution Companies (Discos) and the Transmission Company of Nigeria (TCN), as well as various government agencies such as the Niger Delta Power Holding Company (NDPHC), Nigerian Bulk Electricity Trader (NBET), the Nigerian Electricity Regulatory Commission (NERC) and the Nigerian Electricity Management Services Agency (NEMSA) responsible for the regulation and development of the electricity industry.

The oil and gas industry was also represented at the meeting by senior executives of the Nigerian National Petroleum Company (NNPC), Gas Aggregating Company of Nigeria (GACN) and the Nigerian Gas Company (NGC).

Fashola, who said that the forum was in furtherance to President Muhammadu Buhari led Federal Government’s determination to find practical solutions to issues affecting the nation’s electricity industry, however, appealed to the organized labour and consumers for understanding over the new Multi-Year Tariff Order which came into effect on February 1.

Sympathising with the Anekwe family whose daughters,  Miss Oluchi  Anekwe, University of Lagos UNILAG, student, who was electrocuted due to faulty power cable recently,  the Stakeholders however, acknowledged the responsiveness of the Eko Disco for paying compensation to the family through the company’s insurance company.

On the new tariff order

Responding to questions from the media after being conducted round the completed and ongoing power projects at the Alagbon Transmission and Distribution Sub-station,  under the management of the Eko Distribution Company which co-hosted the meeting, Fashola said although the decision to increase tariff was a hard one, without proper pricing of Power, the whole system would collapse after sometime.

The minister, who likened the decision to a case of quinine and Malaria, added “It is a hard decision, but we appeal to all for understanding because we are doing it in the interest of all the people. We do not have many choices but we promise that it will get better”. Giving assurance that the problem in the Power Sector could be solved with the right tool, Fashola declared, “I know that the people who have been disappointed over a long time will feel a sense of concern that tariff has gone up but the truth is that the government of yesterday lacked the courage to tell the people the true situation”.

“This is why you had review of tariff every two years which presupposed that tariff would increase every two years. But we have done a 10 year tariff and if you look at the tariff closely you will see that about two years from now we will begin to go down a sliding scale and whatever price the tariff offers”. Fashola appealed to the media to help in enlightening the populace on the essentials of power production and distribution adding, “Everybody must know how power is produced and distributed”.

Reiterating the fact for the nation and various stakeholders to allow stability to endure, Fashola submitted that rather than start a disruptive fight, labour and all concerned stakeholders should embrace the path of productivity. The minister, who also expressed reservation about how the privatization exercise was conducted by the last administration, however, said he would move on with what he met on ground and try to improve it assuring that his ministry was capable of solving the problem.

“This is the problem that has been here for the last 16 years if you put it mildly and about 100 years ago if you put it more elaborately. We are less than a hundred days in office but I can assure you we will solve the problem if you give us the tools”, he said. The minister who added that the meeting was to facilitate experience sharing and provide the opportunity for on the spot tackling of problems, said it would also help achieve a better appreciation of the processes of electricity production and the peculiar challenges of each operator.

Speaking specifically about the Alagbon Substation which he had just inspected, Fashola said it sank completely many years ago and was being rebuilt hence its still being under construction.

According to him, the Distribution Centre of Eko Disco had metered distribution panels through which the power received from the Egbin intake line is measured because it must be paid for just as the gas provider for the generating company must be paid and likewise the receiving consumers of the electricity sent to different areas  in the power production economic value chain.

Appealing for stability in the sector, the minister noted that as at January this year, the nation recorded an all time high electricity supply of 5000 megawatts attributing the success to the stability that has been experienced in the market.

Fashola noted that the stability experienced so far in the market is comforting and must be sustained saying, “The stability is giving confidence to the banks, to the gas investors, to the Gencos and a lot of them are coming into Nigeria. They want to participate in power and it’s because of the stability that the government and leadership of the President have provided and we must do everything to protect that stability”, the Minister said.

He also noted that the sector needed a lot more participants given the growing population of the country, “The challenges of Gas, transmission and the way the privatisation of the sector was handled are being addressed, I would rather move forward than lamenting the past.”

Stakeholders’ presentations

At the meeting, representatives of NEMSA, emphasized the need to improve safety standards by DisCos and their contractors in order to reduce accidents and death. NEMSA, also underscored the health and safety issues of the sector and the need for improvement in responsiveness to such issues. It was also agreed that NEMSA would start ranking DisCos for safety compliance and accident reduction, as well as applying sanctions for non-compliance.

Representatives of the AES Power Plant, Egbin Power Plant and the NNPC, agreed to meet later in the week, (yesterday) Thursday, 11th February to complete the on-going negotiations with a view to supplying gas to AES power plant. Addressing interface issues while submitting and discussing on-going plans to review and resolve the issues, TCN representatives identified 51 issues to be resolved affecting supply in some areas of the country.

On its part, NNPC presented their plans, which are expected to add significant gas supplies for power generation. The sector expects an addition of 220mmsfcd by the end of the first quarter of 2016, and 785 mmsfcd by the end of second quarter of 2016 cumulative.

The Nigerian Bulk Electricity Trader (NBET) presented a solution for power sector liquidity issues which involved the development of a Power Sector Liquidity Bond to cover validated present and future liquidity gap until 2018 and the Central Bank of Nigeria is committed to immediate resumption of disbursement of the balance of the N213 billion facility previously approved but suspended. The regulator approved the power purchase between Paras Power and Eko Disco for embedded generation supply to willing customers, effective from February 12th, 2016.

 


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