The National Electricity Regulatory Commission (NERC) has hinted of plans to review and restructure energy tariff system such that would ensure parity in billings by 2021.

The Vice Chairman of the commission, Sanusi Garba, explained that the move was intended to attract investments and improve power supply in the country without hitches and ensure that Nigerians are satisfied with a new tariff system that would commensurate with the amount of energy they consume.

Garba, who spoke at a forum titled ‘Developing Market Associates’ UK-Nigeria Trade and Investment Forum’ held in London, disclosed that the Commission had devised a “recovery plan” to fix the lingering tariff issues.

He explained: “Under the plan, by 2021, tariffs, regular tariffs, will reach parity with cost-reflective tariffs.”

Vice Chairman of the commission, Sanusi Garba
Vice Chairman National Electricity Regulatory Commission (NERC), Sanusi Garba

According to him, the commission has found it difficult to increase tariffs due to poor generation and distribution of power, a situation that many Nigerians have criticized as acting against the nation’s economic drive.

Owing to lack of regular power supply, the NERC Chairman said there were relatively few paying customers on the system; precisely 8 million customers only on the billing platform, out of over 180 million people.

“The few that are paying are actually paying for others that are not paying,” Garba said.

The power sector regulator explained that while the ‘recovery plan’ remained underway, the commission proposed that resetting the current tariff plan would require more investors with a view to boosting power generation and distribution capacity.

Also, as part of the new system, the NERC would encourage diversification of power sources away from the gas. That involves divesting into renewable energy sources in order to “expand the transmission system and, crucially, add 10 to 20 million customers to the billing platform.”

But while investments in the sector are currently stalled as a result of poor supply capacity, the NERC chief assured that “government would soon invite utilities to submit the investments they need so the government can choose the most crucial projects, facilitate outside investment and hold those responsible for money collection accountable.”

Garba added that the sector has a huge potential if millions of new customers and investors can invest in the ongoing diversification so as to take advantage of the tremendous opportunity that is still not discovered by many Nigerians.

Available statistics indicated that out of the estimated 180 million people living in Nigeria, less than half of the population has access to power.

Consequently, the nation’s epileptic power situation has impacted negatively on businesses and lives, allowing for increased cost of production, which transcends to high prices of goods and low demand on the part of consumers due to their low purchasing power.

Analysts believe that if the commission’s proposed ‘recovery plan’ is pursued with diligence it will attract investments into the sector.