In order to stop the increase in energy rates, the Federal Government must provide N3.2 trillion in subsidies to the electrical industry by 2024, according to the Nigeria energy Regulatory Commission (NERC).
This was revealed by NERC chairman Sanusi Garba on Thursday at a stakeholders’ meeting held at the National Assembly Complex in Abuja, which was called by the House of Representatives Committee on Power.
Garba warned that the power industry’s present investments were insufficient to ensure a consistent supply of electricity and warned that the industry would perish if nothing significant was done to solve its problems.
He stressed that before the recent review in tariff, Distribution Companies (DISCOS) were only obliged to pay 10 per cent of their energy invoice, adding that the lack of cash backing for subsidy is creating a liquidity challenge in the sector.
The chairman also said non-payment of subsidies was responsible for the continued dip in gas supply and power generation, adding that the continuous decline of generation and system collapse is largely responsible for liquidity challenges.
“If sitting back and doing nothing is the way to go, it would mean that the National Assembly and the Executive would have to provide about N3.2 trillion to pay for subsidy in 2024,” Garba said.
He added that only N185 billion of the N645 billion subsidy in 2023 has been cash-backed, leaving a funding gap of N459. 5 billion.
In his intervention, the Chairman, House Committee on Power, Victor Nwokolo said the meeting was aimed at addressing the recent increase in tariff and the issue of band A and others.
Nwokolo said officials of NERC and DISCOS have given the committee useful information but revealed that the committee has not concluded with the commission because Transmission Company of Nigeria Generation Companies were not at the meeting.
“We will hold further consultations with them by next week. But from what they have said, which is true, is that without the change in tariff, which was due in 2022, the industry lacks the capital to bring the needed change.
“Of course, with the population explosion in Nigeria, the areas being covered are beyond what they have estimated in the past and because they need to expand their network, they also needed more money,” Nwokolo said.
