An increase in electricity tariff is imminent as the federal government has said it cannot privatise the Power Holding Company of Nigeria (PHCN) unless the Cost Reflective Tariff (CTF) for electricity is fixed.
Minister of Finance and Coordinating Minister for the Economy, Dr Ngozi Okonjo-Iweala, dropped this hint at an interactive forum with Civil Society Organisations in Abuja, yesterday.
According to her, bidders for the PHCN unbundled companies said they found them unattractive in view of the pricing of electricity which they say is not reflective of the cost of generating or distribution.
Though the minister did not state categorically when the increase in electricity tariff would be effected, she however said government could not introduce it earlier because of the partial removal of petrol subsidy. “We did not bring this up before now because of the fuel subsidy removal.
Since we were dealing with the subsidy thing we could not just say remove fuel subsidy today, increase electricity tariff tomorrow and the third day, the next.”
“Right now the power that is distributed is so subsidised. It is painful that despite the high level of subsidy we are still not getting the desired quality. In order for the private sector people to agree to come and generate and sell power, they say they must have a tariff that reflects the cost. That’s where this cost reflective tariff comes in.”
She said, “We have decided as government that the best way to deal with this issue is to get the government out of what it is not capable of managing in a long time. Let the private sector people whether they are Nigerians or foreigners, come and buy, let them buy the companies and generate, and distribute electricity.”
She maintained that leaving PHCN in the hand of government was not going to work. “That is why I insist that the company should be privatised in an open, fair and transparent manner where the best bidder gets it and Nigerians know how it is done not when it is given to someone under the table.”
She pointed out that despite the current challenge in the power sector the economy was growing at 7.9 per cent, so if the sector is improved the economy would grow at a faster rate.
She explained that there is a deliberate change in the way power is distributed, adding that a deliberate effort is made to send power first to the industry areas in order to keep production going thereby ensuring that jobs are created rather than factories shutting down and job losses following.
SOURCE: Leadership Newspaper, 14 April 2012. http://www.leadership.ng/nga/
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