*Says FG to increase petroleum production by 70% in 2018
By Ediri Ejoh, Gabriel Olawole & Adaeze Okechukwu
LAGOS—THE Federal Government said, yesterday, that the country’s power supply was in need of a cost effective tariff.
Vice President Yemi Osinbajo, who disclosed this, said it will be impossible to sustain the power sector in the country without it.
Osinbajo, who spoke at The Platform, a programme organised by Covenant Christian Centre, Lagos, said if there was a single reform that could fundamentally change the narrative of the Nigerian economy, it would be providing regular power supply.
He said: “One of the key things that no one likes to talk about is that there must be a cost-reflective tariff. Without cost-effective tariff, it will be impossible to sustain the power sector going forward.
“Many of the private sector companies that invested in the power sector do not have the resources to continuously invest, to service equipment, meters and do other things. That’s one part of the problem.
“By and large, a major problem has been that the private sector had been unable to invest adequately, especially on distribution and metering (everyone having a meter).
“However, the problem is a little more complicated as they complained that the reason for the insufficient fund is because we do not have a cost-effective tariff.
“They are paying more for producing power than they are being paid by consumers. That has led to two problems. First, gas, as we all know, is the main feed stock for all our thermal stations and we have more thermal stations than any other type of source of power.
“Gas has to be paid for and those who are producing the gas are now owed large amount of money, because the Generating Companies, GENCOs, are not able to pay them. On the other hand, the generating companies complain that they are not able to pay because the distribution companies are not collecting enough money.
“Off course, the Distribution Companies, DISCOs, are saying they are not collecting enough money because the consumers are not paying. So, we have a situation where there is illiquidity in the chain. Thus, there isn’t enough money to service the chain.’’
Osinbajo noted that the Federal Government has decided to introduce some liquidity into the chain by what is called payment assurance scheme as a short term measure to solve the challenges in the sector.
On petroleum production, the Vice President also faulted the importation of refined petroleum product, which constitutes about 30 percent of the country’s foreign exchange, projecting, however, an increase in production to between 60 per cent and 70 per cent in 2018.
Osinbajo said: “Refined petroleum product is crucial. At the moment, we spend over 30 percent of our foreign exchange on importing refined petroleum product. That, of course, doesn’t make sense, because why should a country that has petrol and so much of it not able to refine its own petroleum product. The reason, of course, is that our refineries have been down for a long time.”
“What we are doing is trying to ensure that we bring in private capital into refineries so that more private people are building refineries. I had talked about Dangote refineries earlier, but also there are other private sector initiatives in refining.
Osinbanjo explained government’s commitment towards ensuring a robust Small and Medium-sized Enterprises, SMEs in the country, saying: “We are committed to supporting small and medium-sized enterprises, SMEs, and the application form that used to be seven in the past has been reduced to one, while the Corporate Affairs Commission, CAC, portal is now being managed by private sector company for effective service delivery.”
On anti-corruption war, he said: “On anti corruption war, I don’t agree that it’s one-sided. There was a government in place for 16 years and a lot of what you are seeing, in terms of prosecution, are the activities of the past administration and you will find that there are some government officials in the ruling party who are also being prosecuted, so it is not one-sided.
“As far as President Muhammadu Buhari is concerned, he is committed to the fight against corruption to ensure that anybody that abuses office faces the consequence.’’