The federal government said yesterday that with the renewed financial discipline within the nation’s power sector, following the recent intervention by the Central Bank of Nigeria (CBN), it expects collections of electricity tariffs to hit N100 billion in the short to medium term.
It also disclosed plans to totally eradicate subsidy payment in the power sector by the end of the year, saying that the amount it pays monthly to subsidise the sector was gradually reducing.
Speaking during a web conference organised by the Abuja Chamber of Commerce and Industry (AICC), Special Adviser to President Muhammadu Buhari on Infrastructure, Mr. Ahmad Zakari, explained that the collection efficiency of the Distribution Companies (Discos), has markedly improved since the CBN started warehousing the funds.
Zakari stated that the Buhari administration was focused on moving from the traditional way of funding subsidies or using the liquidity in the sector to fund consumption, rather than using it to provide infrastructure that will ultimately lead to growth.
He said the federal government recently got a nod from the World Bank to fund the distribution and rehabilitation of the sector to the tune of $500 million, which he said is a reflection of the donor community’s confidence in the reforms being carried out by the administration.
According to Zakari, the government at the centre is expecting to spend over the next 24 months, between $2.5 billion to $3 billion in the sector, adding that in less than a year, the power being wheeled by the Transmission Company of Nigeria (TCN) will exceed 7,000MW.
“I will give you some statistics. With enhanced payment discipline through the central bank, some of the work we are doing, already even before it gets to four million meters that we intend to hit under the programme, we see that the tariff went up by on the average 36 per cent, mainly focusing on bands A,B and C.
“But we experienced 64 per cent growth last period in collection. If we continue to do this, in the December circle, the total number was about 65 billion. This was just coming up from an average of N40 billion that we were doing prior to that intervention.
“With this enhanced metering on the service-based tariff, we can see the Nigerian electricity supply industry generating over N100 billion in the near to mid-term. This is very impressive. The hypothesis that we have is that if you enhance payment discipline through metering the population, revenue will go up. We have proven that,” he stated.
Zakari stated that the second hypothesis that the government has is that if Discos are given incentives, they will be able to improve supply,explaining that the power being wheeled which is in the region of 4,900MW will soon be raised to 7,000MW.