“Now what has been happening is that over the last few years, government had been subsidising rates paid by end-users significantly. In 2019, the subsidy was something in the region of N540bn that has been paid.”
The NERC vice-chairman said some persons could argue that the government should continue to subsidise electricity, but stressed that this was not sustainable.
He said the commission would continue to work towards the sustainability of the power business in Nigeria, urging Nigerians to understand why it was necessary to end subsidy on electricity as well as review tariffs.
Garba said, “Yes, government can continue, as a policy, to subsidise, but the path to sustainability of this industry is an electricity market that is financially sustainable.
“Therefore, after the peak of the COVID-19 pandemic, it was considered appropriate to do what is right in terms of what is provided in the law and also what is in the methodology of the commission itself.”
According to him, electricity is a commodity somebody has to pay for and rates review cannot be postponed indefinitely.
Garba said, “If you continue to defer the rates review, unless government has the resources to fill in the gap, the implication is that you will see service plummeting significantly.
“This is because at the end of the day, the generators will not be paid. And if the generation companies are not paid, it means that they will not be able to pay for gas. And so the 3,000 megawatts, 4,000MW and occasionally 5,000MW that we are getting now will significantly come down.”
