The removal of subsidy on electricity, stiff penalty on power theft and a reduction in tariffs are among the recommendations made by the Federal Government and the Labour Technical Committee on Electricity Tariff
The panel, which was raised more than five months ago to appraise the nation’s power sector, however asked the government to delay the subsidy withdrawal till December.
The withdrawal has been scheduled for June.
The panel also recommended that the Distribution Companies (DisCos) should revert to January 2021 Multi-Year Tariff Order (MYTO) rates (about N2 increase in tariff).
It said the transition to 100 per cent market self-sufficiency should be as from December 2021 to ease the burden on consumers.
Besides, the panel advised the government to consider minor tariff reviews by December this year.
It specifically demanded criminalisation of electricity theft with clear-cut penalties, adding that security safety nets should be provided for the most vulnerable customer groups in line with subsisting laws and regulations.
The panel, however, urged the Federal Government to ensure increased energy flow within the national grid, reduction of losses in the network, and consistent implementation of minor reviews to avoid burdens on consumers.
Government’s positions on the key recommendations remained unclear as of last night.
A source said government was still studying the recommendations of the committee.
The committee’s recommendations were contained in the “Final Report of the Federal Government of Nigeria (FGN)-Nigeria Labour Congress (NLC)/ Trade Union Congress (TUC) Technical Committee on Electricity Tariff.
The report, which was exclusively obtained last night by The Nation, said the concerns of the Federal Government should be how to make the power sector Financially Self-sufficient with a view to “providing constant power supply to Nigerians at affordable rates.”
The committee was raised on September 28, last year to, among other things, “review critical issues in the power sector, with the objective of suggesting reforms that will provide succor to Nigerians in the short and long term.
The report reads in part: “The committee is of the general view that it is critical for the Nigeria Power Sector to be financially self-sufficient and viable to attract investments needed to develop it while providing constant power supply to Nigerians at affordable rates.
“Ultimately, the recommendations of this committee below are aimed at a reduction of tariffs by N15 per kilowatt-hour by the December 2021 minor reviews.
“The key areas that will drive tariff reduction are:
Reduction in gas prices (target is N1/kWh-N6/kWh
Increase of energy supplied (target is N3/kWh-N10/kWh; and
Reduction of losses in the system from investment in distribution and transmission interface infrastructure, including mass metering (target is N2/kWh –N4/kWh.
To avoid shock for Nigerians, the committee warned the government against “steep change in tariff” henceforth.
It also recommended that DisCos should revert to N2 increase in tariff which was January 2021 MYTO rates.
It demanded minor reviews every six months in a manner that consumers will not feel the tariff increase.
It said: “Consistent implementation of minor reviews every six (6) months to review inflation and foreign exchange. This is to prevent a steep change in the tariff as occurred in 2020 when minor reviews were not held for four years between 2016 and 2020.
“Thus, it is recommended that the DisCos revert to January 2021 MYTO rates (about N2 in tariff) with an offsetting reduction derived from the implementation of the Minister of State Petroleum Resources Gas Price Committee’s recommendation for a reduction in the Domestic Supply Obligation price and freezing escalation rates for a three-year (3) period.”
Regarding the vandalism of electricity equipment and installations, the committee said: “That legislation on electricity theft be established to criminalize electricity theft with clear penalties and sanctions.”
On the withdrawal of subsidy, the committee advised the government to delay it till December 2021 to enable DisCos to make critical investments and improve their quality of service.
It said: “While acknowledging that the universal access right of all Nigerians to electricity must be upheld to the highest standards, the committee also agreed that the transition to the Service-Based Tariff (SBT) principle was welcomed in anticipation that it would ensure that a significant portion of the Federal Government of Nigeria’s subsidy that was funding the utilization of electricity by predominantly the more affluent of the society would be reduced.”