President Muhammadu Buhari and Vice President Yemi Osinbajo have agreed on the deferment of electricity tariff hike.
The two leaders gave the nod after separate meetings with Senate President Ahmad Lawan and Speaker of the House of Representatives, Femi Gbajabiamila.
This is as the Senate asked the Federal Government to subsidise electricity for Nigerians in a bid to alleviate the proposed hike in electricity tariff, which has been deferred to next year.
Representatives of the power distribution companies (Discos) had maintained that they would support the suspension of the planned hike, if government would bear the difference in the present tariff and what was considered appropriate tariff.
They had planned to effect a new electricity tariff structure from today.
Federal lawmakers on Monday had intervened to halt the proposed hike of electricity tariff by Discos, saying the timing was wrong, coming in the wake of the COVID-19 pandemic and the attendant impact on incomes of citizens.
Lawan and Gbajabiamila, who briefed journalists after the meetings, said Buhari and Osinbajo agreed with the leadership of the National Assembly that the timing of the tariff hike was wrong and it was better deferred.
Gbajabiamila, who said there was the need to increase tariffs to reflect the realities of the time, explained that the meetings at the Presidency had become important given the need for the legislature and executive to reach a consensus on the temporary suspension of tariff increase.
Said Gbajabiamila: “Let me just say that we saw the President earlier this morning and we have also seen the Vice President. The whole idea is that when there is a major policy decision, it is always good that the legislature and executive are on the same page so that we don’t sing different tunes. I would like to say that I think we have all agreed on an increase in cost-reflective tariff, but the issue is that the timing is also important. Sometimes, timing is more important than even the policy decision that you make. There is a saying that ‘the road to hell is often paved with good intentions.’ So, the intentions is good, but what about the timing? We have all agreed to suspend this for a while, tarry a while and get the buy-in of the people; explain to the people why this has to be done, that it is for their betterment and for electricity to get stable. They are businessmen (Discos) and cannot be undercutting themselves. I think, so far, so good, the President and Vice President listened attentively and I think everybody is on the same page. Hopefully, we will get some reprieve between now and whenever, but it’s not going to happen today.”
Lawan said the COVID-19 pandemic had impacted incomes negatively, hence government must do everything possible to make life easier for citizens.
On if the country would get to a point where Nigerians get steady power supply so that billing and metering would not be questioned or difficulty for citizens, Lawan said all stakeholders must adhere to the share purchase agreement signed by government.
“Once we are able to achieve that, we will have a better situation in the power sector in Nigeria. It is doable, it has happened elsewhere. So, we cannot continue to give Discos and Gencos the resources that we can ordinarily deploy to build hospitals. But whatever is necessary for us to do as part of our agreement with them, we must do those,” Lawan said.
Also speaking on the issue, chairman, Senate Committee on Power, Gabriel Suswam, called on the Federal Government to subsidise power supply.
Addressing newsmen, Suswam said: “Nowhere in the world that power is not subsidised, especially in developing economies because there are genuine people, who, because of their income, are unable to pay what is called cost-reflective tariff.
“Nigerians are heavily burdened because of COVID-19. The economy has contracted by 3.2 per cent; that’s a lot.
“So, it makes it difficult for you and me to attend to some of our social problems; would the government prefer to add burden or lessen it?
“The President has been doing well; he has spent so much money, and what we expect is that the spending will gradually reduce or diminish as the power sector becomes more efficient,” he said.
On the way forward, the chairman said it was to make the power sector more efficient and for government to back out like in the oil sector where subsidy had been completely removed.
“Even at that, the government is reducing the pump price. So, should they, in the same vein, increase tariff? It doesn’t make sense,” Suswam said.
He expressed the hope that the executive would agree to subsidise electricity even though it was going to come at a cost.
Why we suspended tariff – Discos
The Association of Nigerian Electricity Distributors (ANED) has said the suspension of proposed service-reflective tariff was initiated by the National Assembly due to their concerns on its timing.
ANED’s executive director, research and advocacy, Sunday Oduntan, who made the clarification in a statement in Abuja, said National Assembly’s concern was also based on what they saw as lapses in the internal workability of the plan within the sector.
According to him, Discos did not lobby for the postponement.
“Members of the NASS are representatives of the people. Based on the feedback they had been getting from their constituents, mainly around the difficult financial realities, they called for a meeting, which we attended, and during the meeting they laid out their concerns.
“Discos have spent the last couple of weeks carrying out massive sensitisations across different platforms preparing their customers for the new service reflective tariff as instructed by the Nigerian Electricity Regulatory Commission (NERC). Discos have also been at the forefront of the calls for a reviewed tariff for years,” Oduntan said.
He said, over the weekend, ANED publicly voiced its concerns about an instruction from NERC its regulator, “which we felt would make the task of winning public confidence more difficult.”
Oduntan said the Discos had committed themselves to removing obstacles that would stand against the success of the take-off date.
He said it was, therefore, “extremely disingenuous for it to be suggested that, on the eve of it to come to fruition, we will now be the ones to initiate its postponement.
“July 1, 2020, had been pegged as the commencement date for a new service delivery-based tariff regime. Based on the recommendation of the NASS leadership, the new regime should now take effect from the first quarter of 2021,” he said.