Private Sector Operators Back Cost-reflective Tariffs

Some representatives of the Organised Private Sector (OPS) have welcomed the approval of cost-reflective tariffs for the electricity sector by President Muhammadu Buhari.

THISDAY had reported that President Muhammadu Buhari had finally approved the official implementation of cost-reflective tariffs for the Nigerian Electricity Supply Industry (NESI).

The new tariff, which will now formally commence on September 1, 2020, was one of the preconditions given by the World Bank for a $1.5 billion loan for Nigeria.

Speaking in a chat with THISDAY, the Director General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf, described the proposed introduction of cost reflective tariffs for the pricing of electricity supply as inevitable and the only alternative to the unsustainable subsidisation of electricity consumption in Nigeria.

Yusuf said that payment of “cost-reflective tariffs is a difficult option, especially given the prevailing economic conditions. But it is the most sustainable option that would salvage the power sector and attract investment.”

He, however, advised that it was important to fix the numerous inefficiencies that characterised the entire power sector value chain and inspire the confidence of electricity consumers through a robust metering programme and guarantee of value for money.

Also, the Director General of Nigeria’s Employers’ Consultative Association (NECA), Mr. Timothy Olawale, said businesses would not be opposed to the payment of costreflective tariffs, if electricity would be provided.

He, however, recommended that, “a staggered approach to cost and service-reflective tariffs. This will allow the Discos to enter into agreements with ‘customer clusters’ for cost-reflective tariffs pegged at an improved quality of service level. These customer clusters will act as test cases for the success, failure and adaptability of the cost and service mechanisms instituted under the service level compacts.”