Expert: Nigerians May Pay N10,000 for 100 Units of Electricity if Tariffs Rise

Peter Uzoho

As apprehension over the anticipated 40 per cent increase in electricity tariff persists, the Chief Executive Officer of PowerCap Limited, Mr. Abiodun Ogunleye, has projected that consumers may be paying as high as N10,000 to vend for 100 units of electricity if the tariff eventually rises.

Ogunleye made the projection in Lagos during a press conference heralding the 2023 PowerSolution Conference slated to hold in Lagos between July 19 and 20, 2023, with the theme: “Sustainable Resolution of the Gaps in the Power Sector.”

According to Ogunleye, who possesses over 30 years’ experience in the power industry, the changes in macroeconomic indices especially upward changes in inflation and foreign exchange make electricity tariff increase inevitable.

Comparatively, he argued that during President Goodluck Jonathan’s regime, one could buy 100 units of electricity at about N1,500 or N1,600. At the closure of President Muhammadu  Buhari’s regime, he stated that it was like N6,000 to N7,000 to buy 100 units of electricity.

“This calculation is going to be leading us to something around N10,000 to buy 100 units. The sector is largely driven by foreign exchange component. The gas suppliers are looking at the international gas market to determine whether they are going to give gas to the generation companies to produce electricity for us locally or to sell their gas to somebody on the international market.

“The same machine that is going to be used in Egypt to generate electricity is what we are also going to deploy in Lagos or at any of the load locations in Nigeria. So, realistically, the next question that should come to mind is, what was the exchange rate when Jonathan resumed and how have we fared?,” he asked.

Noting that the Distribution Companies (Discos) and their investors may have been losing money without the knowledge of consumers, Ogunleye pointed out that a lot of the Discos had been taken back by the federal government.

He maintained that if inflation and increment of tariff were off the table and Discos’ net income taken back to the baseline, it would be clear that the power distributors were not making as much money as they were making way back.

He further explained: “We have moved from about N200/$ to about N400/$. Now, we are at N700 and something to the dollar. Please, let’s be fair to them (the Discos). The only question I think we need to address further is, what is the definition of the fair tariff?

“Let’s make it straight and simple: at all times, let’s allow market forces to determine what happens. What gladdens my heart is the fact that our new president has said he’s looking at wages and it will also come with additional inflation impact and all that.

“But it’s a better way to go than to stifle growth in any sector or to say we are now going to be subsidising the electricity sector because this sector has a lot of users. That would be a more dangerous approach to use.

“So, effectively, the Discos seem to be the whipping baby in the whole value chain. Customers think the Discos are making too much money because you have to pay more.

“But unfortunately, you can also check, how much do they have to pay for the supply they were getting during President Goodluck and what they would need to pay by the time new tariffs are actually allowed.

“Or do we want to shift the subsidy from petrol to electricity? I will say, maybe we should continue with the policy of no subsidy and that no subsidy simply means no subsidy.”

However, announcing the upcoming conference, he said speakers would dissect the 2023 Electricity Act, highlight its implications for the sub-nationals and federal government as well as the expected opportunities and challenges.

Ogunleye stated that some of the topics to be discussed at the two-day event include, Right Operating Environment: State Governments and Creation of New Markets; Power Generation: Making More Capacity Available; Transmission and Distribution: Maintaining Network Infrastructure to Enhance Sustainable Grid, among others.