How Nigerian rulers/leaders are subjecting citizens to poverty and hardship: Nigerians to pay 88% more for electricity
Nigerians to pay 88% more for electricity
Electricity tariffs in the country will increase in April by up to 88 per cent under reforms designed to revive the power sector and attract outside investors, a report said yesterday.
The proposed new rates, reported by the Financial Times of London, will be announced in the coming weeks, ahead of the privatisation of 18 state-run power generation, distribution and transmission companies later this year.
When the new rates come into effect, the cost of a kilowatt hour of electricity would spike from the present N10 to N18.80k, according to calculations by Daily Trust.
Under the new pricing regime, due to become effective in April, tariffs will rise between 25 per cent and 88 per cent, though most customer classes will see a 50 per cent hike in their bills.
Minister of Power Prof. Barth Nnaji said the government is planning to cushion the effect of the power rates increase for the lowest-income consumers, a policy absent during the fuel subsidy removal.
“We are making sure that the urban poor and rural dwellers be provided a subsidy so that they don’t see a significant increase in tariff,” Nnaji said in an interview with the Financial Times in Abuja. “The rest [of the customers] should be able to pay for it.”
But the move is likely to cause controversy, coming just a month after the removal of fuel subsidies, which caused petrol prices to more than double. The price increase prompted street protests and a weeklong nationwide strike, forcing President Goodluck Jonathan to partially backtrack.
The Federal Government says the higher “cost-reflective tariffs” for residential and commercial electricity customers are necessary to ensure that investors can turn a profit.
Nigeria currently sells power below cost at an average of about 10 naira per kilowatt hour, one of the cheapest rates in Africa. But despite having large reserves of natural gas that can fire thermal plants, the country’s electricity supply and service is among the world’s worst, with half of the 160m population lacking access to the grid.
Peak output is little over 4,000MW, with per capita consumption just 3 per cent that of South Africa,
Nigeria’s rival for the continent’s biggest economy.
Frequent blackouts mean that most of Nigeria’s power comes from privately owned petrol and diesel generators, greatly increasing business costs and deterring potential investors.
The Federal Government is hoping that privatisation will greatly improve service and output, with the government targeting 18,000MW by 2016.
The new tariff was calculated to reflect the real cost of supplying electricity, with a return of investment factored in, according to the Nigerian Electricity Regulatory Commission.
This comes to about 23 naira/kWh, which Mr Nnaji said is near the average price in Africa, and is still less than half the cost of self-generated power in Nigeria.
The biggest consumers of electricity – wealthy individuals and businesses – will pay the highest rates, cross-subsidising the less well-off. The government will also provide a N60 billion subsidy this year, allowing the tariff for the poorest customers to be fixed at N3.30K.
Previous attempts to reform the power sector have foundered, despite the injection of billions of dollars. But current efforts appear to have momentum. Bolanle Onagoruwa, director-general of the Bureau of Public Enterprises, charged with selling the six state-owned power generation and 11 distribution companies carved out of the Power Holding Company of Nigeria, told the Financial Times that privatisation should be finished by year end.
Hundreds of companies have expressed interest in investing, according to the BPE.
Nigeria’s transmission company will also be privately managed, with Canada’s Manitoba Hydro and Power Grid Corporation of India shortlisted to submit bids.
The World Bank, which is providing partial risk guarantees to investors, says that Nigeria’s power sector reform is one of the most complex ever undertaken in Africa.
Written by Yunus Abdulhamid, with agency report. Monday, 13 February 2012 05:04
Posted by Mr Michael Martins.
Electricity tariffs in the country will increase in April by up to 88 per cent under reforms designed to revive the power sector and attract outside investors, a report said yesterday.
The proposed new rates, reported by the Financial Times of London, will be announced in the coming weeks, ahead of the privatisation of 18 state-run power generation, distribution and transmission companies later this year.
When the new rates come into effect, the cost of a kilowatt hour of electricity would spike from the present N10 to N18.80k, according to calculations by Daily Trust.
Under the new pricing regime, due to become effective in April, tariffs will rise between 25 per cent and 88 per cent, though most customer classes will see a 50 per cent hike in their bills.
Minister of Power Prof. Barth Nnaji said the government is planning to cushion the effect of the power rates increase for the lowest-income consumers, a policy absent during the fuel subsidy removal.
“We are making sure that the urban poor and rural dwellers be provided a subsidy so that they don’t see a significant increase in tariff,” Nnaji said in an interview with the Financial Times in Abuja. “The rest [of the customers] should be able to pay for it.”
But the move is likely to cause controversy, coming just a month after the removal of fuel subsidies, which caused petrol prices to more than double. The price increase prompted street protests and a weeklong nationwide strike, forcing President Goodluck Jonathan to partially backtrack.
The Federal Government says the higher “cost-reflective tariffs” for residential and commercial electricity customers are necessary to ensure that investors can turn a profit.
Nigeria currently sells power below cost at an average of about 10 naira per kilowatt hour, one of the cheapest rates in Africa. But despite having large reserves of natural gas that can fire thermal plants, the country’s electricity supply and service is among the world’s worst, with half of the 160m population lacking access to the grid.
Peak output is little over 4,000MW, with per capita consumption just 3 per cent that of South Africa,
Nigeria’s rival for the continent’s biggest economy.
Frequent blackouts mean that most of Nigeria’s power comes from privately owned petrol and diesel generators, greatly increasing business costs and deterring potential investors.
The Federal Government is hoping that privatisation will greatly improve service and output, with the government targeting 18,000MW by 2016.
The new tariff was calculated to reflect the real cost of supplying electricity, with a return of investment factored in, according to the Nigerian Electricity Regulatory Commission.
This comes to about 23 naira/kWh, which Mr Nnaji said is near the average price in Africa, and is still less than half the cost of self-generated power in Nigeria.
The biggest consumers of electricity – wealthy individuals and businesses – will pay the highest rates, cross-subsidising the less well-off. The government will also provide a N60 billion subsidy this year, allowing the tariff for the poorest customers to be fixed at N3.30K.
Previous attempts to reform the power sector have foundered, despite the injection of billions of dollars. But current efforts appear to have momentum. Bolanle Onagoruwa, director-general of the Bureau of Public Enterprises, charged with selling the six state-owned power generation and 11 distribution companies carved out of the Power Holding Company of Nigeria, told the Financial Times that privatisation should be finished by year end.
Hundreds of companies have expressed interest in investing, according to the BPE.
Nigeria’s transmission company will also be privately managed, with Canada’s Manitoba Hydro and Power Grid Corporation of India shortlisted to submit bids.
The World Bank, which is providing partial risk guarantees to investors, says that Nigeria’s power sector reform is one of the most complex ever undertaken in Africa.
Written by Yunus Abdulhamid, with agency report. Monday, 13 February 2012 05:04
Posted by Mr Michael Martins.
No comments:
Post a Comment