An energy expert, Dr Damola Omole, Head, Power and Energy Strategy, Dangote Industries, says increasing electricity tariff will not solve the problems bedeviling the power sector in Nigeria.
Omole said this on Wednesday at the ongoing Power Nigeria Agenda Exhibition organised by Informa markets in Lagos.
He said that increasing the tariff would only amount to funding inefficiency, urging the government to intensify efforts to encourage more players to invest in the sector.
The expert advised the government to dilute the distribution companies to minority stake and thereafter sell its major stake to more credible players.
He said that consumers should be metered before effecting tariff increase, as estimated billing was generally unfair.
Omole urged government to look into the issue of supply and cost of gas to the thermal power plants, to reduce the over N7.5 trillion lost annually to irregular power supply.
He said that the country’s manufacturing sector was worst hit by the irregular supply.
According to him, some 17 million small and medium scale businesses spend over N2 trillion annually in running generating sets.
Omole said: “Manufacturers only get seven hours of supply on average, with the balance of over two-third self sourced.
“Grid supply should be 20,000MW for manufacturing sector to thrive, but supply is currently less than 4,000MW.
“Grid power supply is irregular and unpredictable for manufacturing processes,” he said.
He explained that electricity consumed through alternative means cost N78 per kilowatt while supply from the grid was at N32 per kilowatt , thus increasing the cost of production for manufacturers.
The expert said the ripple effects of power shortage include reduced production, job losses and outright closure of factories or relocation to other African countries.
Omole said that the power sector reforms had failed to yield the desired result due to the failure of the generating companies.
He said the lack of synergy between the layers in the energy value chain had resulted in over 2,000MW of electricity not being supplied to the end users by the distribution companies.
Omole also decried the lack of industrial clusters across the country which would have enabled Nigerian manufacturers compete with their contemporaries.
Also speaking, Mr Gareth Rapley , Group Exhibition Director, Informa market, said the exhibition was put in place to find solutions to the challenges facing the power sector in Nigeria.
Rapley said that the energy problem was not peculiar to Nigeria and could be overcome with collaboration between the government and the private sector.
He said the conference was an opportunity for players in the energy sector to dialogue and exchange ideas on how best to address the issues confronting the sector.
Over 130 local and international exhibitors participated in the exhibition.
