The Federal Government has said it can no longer continue to shoulder the cost of electricity tariff shortfalls while trying to ensure reliable power supply for all Nigerians.
Minister of Power, Joseph Tegbe, made this known on Friday at an energy conference organised by the Harvard Business School Association of Nigeria in Lagos, where industry experts discussed the challenges facing the country’s power sector.
According to the minister, several issues continue to undermine electricity supply in Nigeria, including poor revenue collection, inadequate metering, mounting debts owed to power generation companies and weaknesses in the electricity market.
Tegbe stressed that setting electricity tariffs at commercially sustainable rates would make little difference if power providers could not collect payments from customers.
“Commercially viable pricing will work where the supplier can actually collect his money and get paid. There’s no sense in commercially viable pricing if you don’t collect money,” he said.
The minister also revealed that the government was reviewing the structure of the electricity market and the assumptions guiding electricity tariffs in collaboration with the Nigerian Electricity Regulatory Commission (NERC).
He further questioned the continued relevance of the Nigerian Bulk Electricity Trading (NBET) model, under which the government-owned company purchases electricity in bulk from generation companies before selling it to distribution companies.
Tegbe argued that the arrangement had outlived its usefulness and disclosed that his plan was to move the country away from the model.
“NBET ought to have been sunset about five years ago, and I’m telling you my own plan, at the end of the day, is to move from that model. That model will not help Nigeria. We can’t keep covering tariff shortfalls and think we’ll give power to every Nigerian,” he stated.
As part of the proposed reforms, the government is considering a shift towards bilateral electricity agreements.
Under this arrangement, power generation companies could enter into direct commercial agreements with customers or distribution companies under mutually agreed terms.
The proposed changes are expected to reshape how electricity is bought and sold in Nigeria, as the government seeks a more financially sustainable power market and improved electricity supply across the country.
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