July 16, 2024

Senate on war path with FG over further increase in fuel price, electricity tariff

  • vows to protect Nigerians

Adebayo Obajemu

The Senate has given assurances to Nigerians that it was doing necessary oversight activities to ensure that there is no hike in petroleum pump prices and electricity tariffs despite the falling value of the naira against major world currencies.

The chairman of the Senate Committee on Media and Public Affairs, Senator Yemi Adaramodu, gave the assurance in an interview with journalists in Abuja.

When questioned about the Senate’s response to concerns regarding potential increases in electricity tariffs and fuel prices due to high petroleum landing costs and the Federal Government’s indebtedness to electricity generating companies, he affirmed that the Senate is committed to preventing Nigerians from facing exorbitant costs for electricity and fuel.

Recall that the Nigerian government last Wednesday said it has become very difficult to sustain subsidies on electricity in the country.

Nigeria’s Minister of Power, Adebayo Adelabu, disclosed this at a press conference in Abuja.

Mr Adelabu explained that the indebtedness of the country’s power sector to electricity-generating companies (GenCos) and the gas companies (GasCos) has risen to over N3 trillion.

“Today, we are owing a total of N1.3 trillion to the power generating companies, out of which 60 per cent is owed to gas suppliers. Today we have a legacy debt, prior to 2014, to the gas companies of $1.3 billion; at today’s rate, that is close to N2 trillion.

“Now, if you add N2 trillion legacy debt owed to gas companies and the N1.3 trillion being owed to GenCos, we have an inherited debt of over N3 trillion in this sector. How will the sector move forward? Nigerians deserve the right to know this.

“However, we are working underground to make sure that we resolve these issues and pay these debts either through cash injections or through guaranteed debt instruments to ensure the continuity in the generation of power,” Mr Adelabu said.

Speaking on electricity subsidy, he said countries like Ghana, Togo, and Benin Republic pay much more than Nigeria for electricity while noting that the government might not be able to continue funding electricity subsidies.

“What we have made provision for in the 2024 budget for subsidy is N450 billion and we will require N2.9 trillion for subsidy. So can we afford it? We must be realistic. Can we afford it?” he noted.

Mr Adelabu said N450 billion is less than 20 per cent of the almost N3 trillion that is required for subsidy if the nation must continue at the current electricity price.

“So these are things that we need to decide on as a nation,” he said.

He further explained that issues with the electricity supply value chain are many across all segments in the value chain.

He said this was made complicated by a lack of sustaining liquidity and infrastructure funding, as well as structural misalignment.

Mr Adelabu added that the simple technical operational issues are inadequate shortage of gas supplies and ageing dilapidated generation machinery causing below optimal capacity utilization causing short supply by the GenCos.

“Inadequate power evacuation capacity at GenCos locations, coupled with unstable and fragile transmission lines, devoid of automated frequency controls, lacking in fail-over or back-up capacity with frequent human disturbances through vandalization and theft.

“Aging weak distribution infrastructures (lines and transformer) coupled with huge meter gap causing unbearably large technical and collection losses.

“These are issues that look so simple on the surface and should ordinarily require little effort to fix over time,” he said.

The minister’s comments appear to indicate the government’s plan to remove the electricity subsidy, in tandem with a recommendation of the International Monetary Fund (IMF). However, the government has been reluctant to implement the recommendation as it would further impoverish Nigerians amidst a cost-of-living crisis caused by government policies.

He explained that the indebtedness of the country’s power sector to electricity-generating companies (GenCos) and gas companies (GasCos) had risen to over N3tn.

It has also been reported in the Media that due to the prevailing black-market rate of about N1,600 per dollar, the landing cost of petrol has soared to about N1,009 per litre, marking a substantial increase from N720 per litre recorded in October 2023.

Adaramodu said: “The issue of petroleum matter and that of power, especially the two, one, if you can just recall, the Senate, especially has instituted Committee probes into the activities of the Nigerian National Petroleum Corporation Limited (NNPCL) and even the oil sector generally and then we are awaiting the reports.

“The reports will determine our own approach to what we are going to advise or what we are going to compel the executive to do about this issue.

“On the issue of power too, a Minister can come out and say whatever he would like to say, which is as it applies to his ministry but the minister is not the last voice on such issues.

“The presidency is there and even our own side, we have a committee solely responsible for power matters.

“Appropriately, those committees will swing into action and then, they will brief the Senate accordingly, and from their briefing, we would take a position

“What I want to assure Nigerians is that the 10th Senate will not abandon them because it means that we have abandoned ourselves. We are not here on our own.

“There’s nothing that happens to one Nigerian that does not happen to us and because of that, we feel it even more than any other person because we are the very close people to our people.

“When they yawn, we feel the malaria and when they take even Panadol, we feel the relief.”

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