Nigeria to Spend $1.4 Billion to Subsidise Electricity Cost, Says Gov’t

The Nigerian government says it is spending N177.95 billion (about US$1.4 billion) to subsidize electricity consumption in the country over the next three years. According to a statement signed by Mr Olusegun Adeniyi, Senior Special Assistant to the Nigerian President on Communication on Wednesday in Abuja, the new policy is contained in the new tariff regime for electricity consumption in Nigeria which takes effect from 1 July, 2008.

The statement said that the new tariff regime and the Multi-Year Tariff Order (MYTO), approved by the Federal Executive Council during its meeting on Wednesday, was a major step towards attracting investment for the rapid development of Nigeria’s power supply sector.

“The introduction of the MYTO is expected to boost the confidence of lenders and investors alike in Nigeria’s power sector as it provides for reasonable returns on capital investment.

“The correct pricing of power will, in concert with other measures being adopted by the Yar’adua administration, facilitate an orderly transition to a much more efficient and reliable market-oriented power-supply system,” he said.

Adeniyi said that consumers would not immediately pay more for electricity under the order as the Nigerian government would establish a MYTO Support Fund to cover the revenue shortfalls during the three-year transition period.

The MYTO, developed by the Nigerian Electricity Regulatory Commission (NERC), is predicated on the quantification of the total revenue requirements of all power industry participants.

Adeniyi said that in approving its implementation, the Nigerian government recognized that correct pricing for the commercial viability of the power industry was of critical importance.

He said that this would enable the resolution of the twin problems of inadequate and unreliable electricity supply.

With the implementation of the MYTO, Adeniyi said the current inability of the power industry to generate revenue to cover operating costs, undertake maintenance and make new investments, would be resolved.

Meanwhile, the Nigerian President had at his meeting with state governors on Tuesday sought their consent for a new funding regime for the electricity industry.

He said that the regime would provide for the massive injection of funds for the rapid expansion of Nigeria’s power generation, transmission and distribution infrastructure.

Adeniyi assured that Yar’adua was resolute in resolving Nigeria’s power supply problems and was ready to do everything possible to ensure that stable power was achieved within his tenure.

Source African Press Agency

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