Tariff review will boost power sector liquidity - Minister
ADEBAYO Adelabu, Nigeria’s minister of power, has explained that the recent increase in electricity tariff was necessary to boost the liquidity in the power sector.
The minister, who spoke during a ministerial press briefing in Abuja, said that the sector had been deprived of the required liquidity to keep it running sustainably, rendering it unattractive for investments.
He explained that there had been funding gaps in the sector, especially with the generation value chain, stating that the generation companies have been unable to pay for the gas needed to generate power.
“Number one issue which I believe this new tariff is going to address is the liquidity and pricing issues. This sector has been deprived of the required to keep it running on a sustainable level to keep it to build a business because it is no longer attractive to investors, even the operators do not have as much liquidity to invest in the expansion of their infrastructures.
“The generation companies could not pay the gas companies, which is feedstock and the raw materials used in generating the power. Generation companies cannot service their equipment, it gets to a level that they cannot pay the salaries of their workers because of the accumulated debts in the sector due to the lack of liquidity and commercial pricing.
“And I believe that previous administrations have shied away from addressing it, but it is a tough conversation that we must have at a point if we are serious about stable power sector in this country. And this government is committed to dealing with it, but the gains will come very soon and the gains shall be permanent.
“The monies are not coming because of lack of liquidity, investors are not coming because they do not see a line of sight of recovery of their investments, not to talk of making profits. The bankers are not lending because it is not attractive to lenders.”
The Nigerian Electricity Regulatory Commission (NERC), on Wednesday approved an increase in the tariff payable by electricity customers to N225/kwh from N68/kwh.