OrderPaperToday – The Senate on Tuesday urged the Federal Government to suspend the planned electricity tariff increase which is scheduled to take effect from 1st July 2020 by bearing in mind increased hardship resulting from the COVID-19 pandemic.
The chamber also mandated its committee on power to investigate all Federal Government interventions in the power sector since the privatization of the sector to date with a view to ascertaining the adequacy of such interventions and their desired impact and to report back within four weeks.
These resolutions followed a motion moved by Senator Gabriel Suswam (PDP, Benue) on the power sector recovery plan and the effect of COVID-19 pandemic.
In his presentation, he noted that Federal Government through the Federal Ministry of Finance intimated the leadership of the National Assembly of plans to establish a N1.7 trillion COVID-19 crisis intervention fund to be utilized to upgrade healthcare facilities across the country, stimulate agriculture, solid materials, power sector and also execute social intervention programmes that will benefit the masses.
He then drew the attention of the Federal Government to the need to include the sector in the disbursement of the proposed fund particularly because of the vital role of stable electricity supply to current efforts towards “jump-starting the economy which is till groaning under the impact of the pandemic.”
Suswam said: “The stable and uninterrupted power supply is also a critical factor in the management of COVID-19 patients as well as in the implementation of the proposed upgrade of healthcare facilities across the country after the pandemic.”
He further informed that prior to the outbreak of the COVID-19 pandemic, the Nigerian Electricity Supply Industry (NESI) was already facing “teething operational constraints” which include “absence of cost-reflective tariffs, inadequate enumeration and metering of consumers, limited access to funds for investment, poor revenue generation and high levels of aggregate technical commercial and collection (ATC & C) losses,
“Generation Companies (GenCos) were owed 72 percent of their revenue in 2019 while the Distribution Electricity Companies (DisCos) reported average ATC &C losses of about 41 percent in the same year. All these constraints prevented the NESI from performing optimally across the power value chain.”
With the outbreak of the COVID-19 pandemic, it has further impacted negatively on NESI as the DisCos reported a 50% loss of their average monthly revenue collection for the months of March and April 2020 respectively even as the Federal Government continues to harp on the need for a stable electricity supply, he stated.
Hence, he requested the Federal Government through the Ministry of Finance to include the Nigerian Electric Power sector in the disbursement of the proposed N500 billion COVID-19 Crisis Intervention Fund in order to ameliorate the financial hazards and operational challenges such as metering of actual consumers and recent problem arising from the pandemic.
He also asked that the Central Bank of Nigeria (CBN) should allow operators in the power sector access to foreign exchange for procurement of equipment and materials
The Federal Government was also urged to consider additional tariff support to cushion the effect of rate shock over a fixed period to allow the time required for the Transmission Company of Nigeria (TCN) and the DISCOs to access funds and implement performance improvement investments that will support increased tariffs to certain classes of consumers during the pandemic.
The resolutions were approved by the chamber.
The Senate President, Ahmad Lawan reacting to the motion affirmed the need to “review and probably reverse” privatisation of the sector.
He said: “We gave them our common patrimony and they still come back as DisCos and GenCos to look for money from the public. The time has come to review and probably reverse this privatisation, if we leave them for the next 10 years there would be no power in Nigeria.
“Like I said before this motion was taken, the privatisation has so far not been successful. We expected efficiency, effectiveness in power supplies but probably on both sides, maybe the purchase agreements were not adhered to on both sides. What is obvious is that the DisCos particularly have no capacity at the moment to supply us power.
“The GenCos have challenges too. It is not good that we give them money we sold – these are businesses. If there are areas we must intervene as a government must be seriously justified.
“The way it is I think there is need to review this privatisation to see what has happened. Something is certainly not right. In the event that this thing does not work properly, there will be need for the government to look into it.”