DisCos Say Most Nigerians Can Not Afford Electricity Costs Without FG's Subsidy
- Electricity distributors said that Nigerians cannot afford the cost of electricity without a subsidy
- They noted that the FG would continue to subsidise power until the industry is completely developed
- According to the DisCos, subsidy is necessary for the Federal Government to keep the business alive
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The majority of Nigerians won't be able to afford the actual cost of the power delivered to them, according to the Association of Electricity Distributors of Nigeria (ANED).
ANED stated that until the industry is completely developed and reaches a status of charging cost-reflecting tariffs, the Federal Government will continue to pay electricity subsidies.
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The explanation follows NERC's announcement last week that the Federal Government spent a total of N135.23 billion to subsidise electricity usage in the second quarter of 2023.
Actual cost nearly impossible to charge
The Sun reported that ANED Regulatory Specialist, David Adeyeye revealed the most recent industry stance during a live television appearance last week.
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Adeyeye had claimed that it would be nearly impossible to charge Nigerians the actual cost of power given the existing conditions in the foreign exchange market.
Today, as we speak the naira exchange rate to a dollar is about N1,150. So, if you allow that, the cost of power becomes unsustainable and that is why a cushion that works must be created in other to allow Nigerians to have access to power because we need power to run the economy.
Until Nigerians are able to make more money and purchase electricity at a price that is representative of the cost, Adeyeye contends, the government must get involved.
He added:
"All over the world, there is a form of subsidy, especially for the power sector because it is a highly capitalized industry and Nigeria is not doing something abnormal.’
Adeyeye said that even if it is invisible, subsidies have always been a part of the electricity sector and are necessary for the Federal Government to keep the business alive.
He said the FG gave the Discos the stabilisation cash in 2013 through the Central Bank of Nigeria to bridge the cost-reflective and permitted price gaps.
He said that in addition to the stability money, the Federal Government also offered a N701 billion payment assurance guarantee to cover any market deficits.
Adeyeye stated that the Nigerian Electricity Regulatory Commission's (NERC) allowed tariff is not cost-reflective because the Gencos, Discos, and Transmission Company of Nigeria (TCN) were selling power to Nigerians at a price that was artificially depressed compared to their cost.
Earlier reports highlighted that ten years after receiving a license to operate, GenCos and DisCos will know their fate in the coming weeks.
Meanwhile, in partnership with the Central Bank of Nigeria, the Federal Government announced plans to support the domestic production of four million prepaid meters.
Ex-Power Minister Barth Nnaji Speaks on Cabal Benefitting From Poor Electricity Supply in Nigeria
Legit.ng reported that Barth Nnaji, a former minister of power, has alleged fuel suppliers and generator sellers are sabotaging efforts to ensure Nigerians have consistent access to power.
The professor claimed while participating in "The South East Political Roundtable" on Flo FM in Umuahia, Abia State.
According to the former minister, the ongoing failure of the national grid remained a significant source of concern for Nigerians.
Source: Legit.ng
