The failure of the industrialization programmes of the 1970s and the early 80s especially in Northern Nigeria has been attributed to, among other factors, unreliable and costly access to energy.
The Chairman, Board of Directors of Kaduna Electric, Alhaji Yusuf Hamisu Abubakar made the assertion in a paper titled “Electricity as an Essential Component for Economic Growth in Nigeria: Challenges and Prospects” presented on Saturday night at Kaduna during the farewell dinner organized by Kaduna Chamber of Commerce, industry, mines and agriculture in honour of exhibitors in the just concluded 38th Kaduna International Trade Fair.
Alhaji Yusuf Hamisu Abubakar who called for comprehensive and holistic review of the challenges confronting all participants in the Nigerian Electricity Supply Industry stressed the need for a balance between cost reflective tariff and affordability of electricity in Nigeria.
He argued that unless the contending issues of provision of qualitative and reliable supply through the adoption of cost reflective tariff and affordability of electricity by the citizenry, small and medium enterprises as well big industrial organization is urgently addressed, the country’s desire for industrialization will continue to suffer serious setback.
The electricity boss affirmed that the Nigerian Electricity Regulatory Commission, NERC the umpire in the Nigerian Electricity Supply Industry, NESI, tried to strike a balance, albeit unsuccessfully, by adopting the sculpting measure, where distribution licensees were directed to charge less than their cost reflective tariff in the interim hoping that they can be able to charge appropriate tariff later.
In his words,“Nigeria Electricity Regulatory Commission (NERC), being the regulator for the industry has the mandate to approve tariffs. In an effort to make electricity tariffs more affordable, NERC adopted sculpting of the tariff such that Discos are required to under-recover now (by charging less than the cost reflective tariff) and are allowed to recover in the future. This model, while bringing temporary ease on the retail tariff, comes with attendant challenge of how to manage the huge shortfall resulting from the sculpted tariff.”
He also dismissed, as irrational and detrimental to the growth of the economy, the erroneous impression being created in some quarters that electricity distribution companies, Kaduna Electric inclusive are calling for upward review of electricity tariff.
According to him, “charging a cost reflective tariff of more than N70/KWH at this period of economic recession is not only irrational but detrimental to the growth of the economy. Therefore, Kaduna Electric fully supports a fair and affordable tariff that will support growth and development within our franchise states. It is however important to note that as privately run company, decisions are guided based on its business case that does not jeopardise the interest of all major stakeholders”.
He contended that “the crucial role energy plays in the development of the economy cannot be over emphasised. Industries in this part of the country can only thrive with reliable and affordable access to electricity. While this is much desired by all, the current structure does not fully support the realisation of this objective”.
He called for government’s interventions in the areas of “subsidizing the price of gas to thermal power plants, bearing the burden of exchange rate shock on the retail tariff, taking up responsibility of tariff shock due to low generation capacity as a result of security issues, support the Gencos and Discos to access cheap finance through international, regional or local developmental initiatives among others” to moderate prices and make electricity more reliable and accessible”.
The government, he submitted, has the overall mandate and authority to steer the course of economic direction in this country and she has a critical role to play in ensuring that this balance is achieved.