The Minister of Power, Mr. Adebayo Adelabu has ordered an investigation into the five-year extension of license for electricity distribution companies after the elapse of their initial ten-year license from 2013 to 2023.
Mr Adebayo Adelabu disclosed this during a one-day interaction session with journalists in Abuja.
He said,
- “When I came in, the licenses I saw were for 10 years, 2013 to 2023. But along the line I spoke to the Nigerian Electricity Regulatory Commission, NERC Chairman, and he said, the licenses have been extended for another five years.”
- “We are trying to review the correctness of that. We have ordered an investigation into the extension of the licenses if they are actually in order,”
Speaking further, the minister explained that while the federal government may find it difficult to review the contracts with electricity distribution companies it’s working on creating mini discos for states across the country for proper coverage of consumer needs.
Additionally, he urged state governments to actively engage and cooperate with the Distribution Companies (DISCOs) within their respective states by assuming a more proactive role and investing in the power sector through the DISCOs.
Tariff increase not politically expedient
The Minister also emphasized that the Ministry would engage in discussions with the DISCOs to explore the most effective strategies for advancing the sector.
He made it clear that the Nigerian government has no plans to raise electricity tariffs.
He said,
- “It is not politically expedient and reasonable to implement a tariff that is doubling the existing tariff because part of the reason for an escalated tariff is because the cost of gas today is still done in dollars and today 75 to 80% of our power generation comes from gas power when there is an upward movement in exchange rate it affects the tariff.”
Commercialization of the power sector will be better
Mr Adelabu further opined that privatization of the power sector was not the way to go rather commercialization would be better since most power is a capital-intensive industry and private actors don’t have the needed resources.
Another “political” Minister…SMH
Let the supposedly INDEPENDENT regulator do its job – both in respect of licensing and tariffs. For the Minister to say that it is not “politically expedient” to allow DISCOs to charge tariffs that cover the cost of producing and distributing electricity is simply obtuse!
What is the authority on independence of NERC? The Government has the prerogative and could simply concede to NERC. Nevertheless the Minister has played for political correctness, and need to distinguish privatisation from commercialisation.