Power: Stakeholders Advocate Cost Effective Tariffs for Industries, Subsidised Electricity for Households

Dike Onwuamaeze

Stakeholders in the power sector have advocated that commercial and industrial clusters should have 24 hours electricity supply under cost effective tariffs while subsidised electricity from the national grid should be redirected to households and underserved areas that needed them most.

The stakeholders made this call last week at the Lagos Chamber of Commerce and Industry (LCCI) Power Sector Seminar with the theme: “Developing A Sustainable State Energy Market,” where they declared that 24 hour electricity supply is attainable in Nigeria if appropriate collaboration, frameworks and right pricing are put in place.

They pointed out that collaboration through creative power procurement framework between the DISCOs and the Independent Power Producers (IPPs), involvement of state governments in addressing investment challenges are critical factor in attaining uninterrupted power supply in Nigeria.  

Speaking during the seminar, the Chief Operating Officer of Elektron Energy, Mr. Jide Onakoya, emphasised the need of ensuring that subsidied electricity should go to residential neighbourhoods while commercial and industrial clusters should pay cost effective tariffs.  

Onakoya said: “They are commercial entities that could pocket and stomach that kind of tariff. That will reduce the burden of sending power to these industrial clusters from the DISCOs and push the DISCOs to sending power to other areas they were not serving.

“So, that is one thing the state governments can do with their new regulations to help people who need electricity to freeze water to make ice blocks. You cannot overestimate what three or four hours of extra electricity can do in the lives of common people.

“For me that may be the way the states can step in and help to redirect power from commercial and industrial users to residential homes.”

Similarly, the Group Chief Executive Officer of Fenchurch Group, Mr. Olufemi Bakare, said that the country is begining to see the prospects of having 24 hours power supply.  

Bakare said: “The truth of the matter is that it is possible to have 24 hour power supply but is should be absolutely paid for because power is a commodity and has to be paid for.

“There has been misalignment for a very long time between the cost of power and what the market is paying. We must get to cost effective tariff someday.”

He added, “If you use diesel today, and a lot of industrial and commercial clients are off the grid as they are using diesel, you will have a kilowatt of power at N430. If you want to use gas, you will be spending about N230. But the tariff from government now is N209.

“Power to an extent is still subsidised in this country. But it will balance out when people improve their power consumption.  The power sector is changing and we will start to see a lot of power in the system. But the state, power developers and banks have to work as a team.”

Speaking in the same vein, the Chief Commercial Officer, Havenhill Synergy Limited, Mr. Tolu-Tope Dada, said that the target market for the IPPs are those generating power at N430 per unit with diesel.

Dada said: “If we are really serious about achieving steady power supply the bold step is the Band ‘A.’ Those on Band ‘A’ understand the cost of power and the difference between paying N230 and N430.

“We should be focusing on those who know what they are using power for and what they are saving by being on Band ‘A.’”

In his welcome address, the President of LCCI, Mr. Gabriel Idahosa, said that the Nigerian energy market is at a pivotal juncture where collaboration, innovation, and strategic investments are required to foster reforms, promote sustainable growth and catalyse investments that would translate to a transformative energy sector in Nigeria.

Idahosa said: “We must develop a robust and adaptable policy framework that encourages investment and fosters competition. The National Integrated Electricity Policy and Strategic Implementation Plan NIEP-SIP will serve as a guiding blueprint, addressing critical areas such as rural electrification, public-private partnerships, and bulk power purchase agreements. Regulatory clarity and enforcement of cost-reflective tariffs are essential to attract and sustain investments.”

Also, the Commissioner, Lagos State Ministry of Energy and Mineral Resources, Mr. Biodun Ogunleye, said that a reliable and sustainable electricity market is essential in building a thriving, innovative and inclusive society.

Ogunleye said that Lagos State is committed to increasing electricity generation capacity through a mix of traditional and renewable energy sources in furtherance of its goal of ensuring “stable and sufficient supply of electricity to meet the growing demands of our population and industries.”