…Says, Govt Has Spent About N1.7 trillion to Supplement Electricity Tariffs Shortfalls …5 Million Nigerian Households to Benefit from Solar Home Systems President Muhammadu Buhari has said the federal government can no longer afford to sustain fuel and electricity subsidies, if reasonable provisions must be made for health, education and other social services. He also
…Says, Govt Has Spent About N1.7 trillion to Supplement Electricity Tariffs Shortfalls
…5 Million Nigerian Households to Benefit from Solar Home Systems
President Muhammadu Buhari has said the federal government can no longer afford to sustain fuel and electricity subsidies, if reasonable provisions must be made for health, education and other social services. He also revealed that there is no provision for fuel subsidy in the revised 2020 budget.
In his address to the First Year Ministerial Performance Review Retreat at the State House Conference Centre in Abuja, Buhari said the Coronavirus disease (COVID-19) pandemic has led to a severe trimming of the funds available to finance the nation’s budget and that it has severely hampered capacity too.
“One of the steps we took at the beginning of the crisis in March when oil prices collapsed at the height of the global lockdown, was the deregulation of the price of premium motor spirit (PMS) such that the benefit of lower prices at that time was passed to consumers. This was welcome by all and sundry.
“The effect of deregulation though is that PMS prices will change with changes in global oil prices. This means quite regrettably that as oil prices recover, we would see some increases in PMS prices. This is what has happened now. When global prices rose, it meant that the price of petrol locally will also go up.
“There are several negative consequences if Government should even attempt to go back to the business of fixing or subsidizing PMS prices.
“First of all, it would mean a return to the costly subsidy regime. Today we have 60% less revenues, we just cannot afford the cost.
“The second danger is the potential return of fuel queues – which has, thankfully, become a thing of the past under this administration.
“Nigerians no longer have to endure long queues just to buy petrol, often at highly inflated prices.
“Also, as I hinted earlier, there is no provision for fuel subsidy in the revised 2020 budget, simply because we are not able to afford it, if reasonable provisions must be made for health, education and other social services. We now simply have no choice,” Buhari said.
The President, however, assured Nigerians that the government is extremely mindful of the pains that higher prices mean at this time.
“We do not take the sacrifices that all Nigerians have to make for granted. We will continue to seek ways and means of cushioning pains especially for the most vulnerable in our midst.
“We will also remain alert to our responsibilities to ensure that marketers do not exploit citizens by raising pump price arbitrarily.
“This is the role that government must now play through the PPRA. This explains why the PPRA made the announcement a few days ago setting the range of price that must not be exceeded by marketers.
“The advantage we now have is that anyone can bring in petroleum products and compete with marketers, that way the price of petrol will be keep coming down,” Buhari said.
Speaking on the recent service based tariff adjustment by electricity distribution companies (DisCos) in the country, the President it was a source of concern.
He said so far to keep the industry going, the nation had spent almost N1.7 trillion, especially by way of supplementing tariffs shortfalls, and that there was no more resources to continue in this way.
Buhari said it would be grossly irresponsible to borrrow to subsidize a generation and distribution which are both privatized.
“Let me say frankly that like many Nigerians I have been very unhappy about the quality of service given by the Discos, but there are many constraints including poor transmission capacity and distribution capacity.
“I have already signed off on the first phase of the Siemens project to address many of these issues.
“Because of the problems with the privatization exercise, government has had to keep supporting the largely privatized electricity industry.
“So far to keep the industry going we have spent almost 1.7 trillion, especially by way of supplementing tariffs shortfalls.
“We do not have the resources at this point to continue in this way and it will be grossly irresponsible to borrow to subsidize generation and distribution which are both privatized.
“But we also have a duty to ensure that the large majority of those who cannot afford to pay cost reflective tariffs are protected from increases,” he said.
The President said the Nigerian Electricity Regulatory Commission (NERC), the industry regulator therefore approved that tariff adjustments had to be made but only on the basis of guaranteed improvement in service.
“Under this new arrangement, only customers who are guaranteed a minimum of 12 hours of power and above can have their tariffs adjusted.
“Those who get less than 12 hours supply, or the Band D and E Customers MUST be maintained on lifeline tariffs, meaning that they will experience no increase. This is the largest group of customers,” Buhari explained.
He went further to say that the government has also taken notice of the complaints about arbitrary estimated billing.
“Accordingly, a mass metering program is being undertaken to provide meters for over 5 million Nigerians, largely driven by preferred procurement from local manufacturers – creating thousands of jobs in the process.
“NERC has also committed to strictly enforcing the capping regulation which will ensure that unmetered customers are not charged beyond the metered customers in their neighbourhood. In other words no more estimated billings,” he said.
Buhari also stated that the process of providing financing support through the CBN for manufacturers and retailers of off grid solar home systems and mini-grids who are to provide the systems had begun.
He stressed that the five million systems under the ESP’s Solar Power Strategy will produce 250,000 jobs and impact up to 25 million beneficiaries through the installation.
“In addressing the power problems we must not forget that most Nigerians are not even connected to electricity at all. So as part of the Economic Sustainability Plan, we are providing Solar home systems to 5 million Nigerian households in the next 12 months.
“We have already begun the process of providing financing support through the CBN for manufacturers and retailers of Off Grid Solar Home Systems and Mini-Grids who are to provide the systems.
“The Five million systems under the ESP’s Solar Power Strategy will produce 250,000 jobs and impact up to 25 million beneficiaries through the installation.
“This means that more Nigerians will have access to electricity via a reliable and sustainable solar system.
“The support to Solar Home System manufacturers and the bulk procurement of local meters will create over 300,000 local jobs while ensuring that we set Nigeria on a path to full electrification.
“The tariff review is not about the increase, which will only affect the top electricity consumers, but establishing a system which will definitely lead to improved service for all at a fair and reasonable price.
“There has been some concern expressed about the timing of these two necessary adjustments.
“It is important to stress that this is coincidental in the sense that the deregulation of PMS prices happened quite some time ago, it was announced on 18 March 2020 and the price moderation that took place at the beginning of this month was just part of the on-going monthly adjustments to global crude oil prices.
“Similarly, the review of service-based electricity tariffs was scheduled to start at the beginning of July but was put on hold to enable further studies and proper arrangements to be made.
“This government is not insensitive to the current economic difficulties our people are going through and the very tough economic situation we face as a nation, and we certainly will not inflict hardship on our people.
“But we are convinced that if we stay focused on our plans, a brighter and more prosperous days will come soon.
“Ministers and senior officials must accordingly ensure the vigorous and prompt implementation of the ESP & all of our programmes, which will give succour to Nigerians.
“In this regard, the Central Bank of Nigeria (CBN) has created credit facilities (of up to N100B) for the Healthcare (N100 Billion) and Manufacturing (N1 Trillion) sectors.
“From January, 2020 to date, over N191.87Bn has already been disbursed for 76 real sectors projects under the N1TRN Real Sector Scheme; while 34 Healthcare projects have been funded to the tune of N37.159Bn under the Healthcare Sector Intervention Facility.
“The facilities are meant to address some of the infrastructural gap in the healthcare and manufacturing sector as a fall out to the COVID-19 pandemic and to facilitate the attainment of the Government’s 5-year strategic plan,” Buhari stated.
He also stated that the “Implementation of a Willing Buyer, Willing Seller Policy for the power sector, has opened up opportunities for increased delivery of electricity to homes and industries.
“We are also executing some critical projects through the Transmission Rehabilitation and Expansion Programme, which will result in the transmission and distribution of a total of 11,000 Megawatts by 2023,” the President said.