Nigerian Society of Engineers say electricity tariffs must be raised to generate cash for investment

NIGERIAN Society of Engineers (NSE) leaders have challenged the federal government to increase electricity tariffs and invest the extra income generated in power plants and distribution as a way of addressing the crisis afflicting the sector.

Reeling from a chronic $100bn annual infrastructure deficit, Nigeria is plagued by constant power cuts due to the poor and limited electricity facilities in the country. Nigeria's total generated power is less than 3,000MW, which is wholly inadequate as industry experts have suggested that the nation needs about 180,000MW to meet her needs.

However, with a meagre annual budget of $28.8bn, Nigeria is struggling to find the capital to invest in generation plants, distribution centres and transmission networks. Due to the constant power cuts as providers have to ration the meagre amounts of electricity available, Nigeria is now the largest user of medium sized generators in the world, with every street buzzing to the sound of environmentally-unfriendly generators.

Calling on the federal government to address the issue urgently,  Adekunle Mokuolu, the NSE president, said that Nigeria needs upward review of electricity tariffs to boost the power sector. He added that the current problems in the sector, including estimated billing, could be addressed by raising tariffs.

Mr Mokuolu, who spoke during a memorial lecture in honour of Engineer John Egbe, a former NSE national vice chairman, said:  “The challenge with the power sector in Nigeria is not principally with the engineers but the problem is on how we manage the various components that make up the sector like finance, policy, management and infrastructure. Standards in this country are bastardised, so the distribution companies are using that to break even because the overhead costs for the production and distribution of electricity is very high while the tariff is very low.

“So, the distribution companies which deal directly with the consumers, have to rely on estimated billing to increase their revenue. Until the tariff paid by electricity consumers is reviewed upwards to sustain high revenue inflow to power production and distribution companies, there can’t be steady power supply in the country."

He added that power distribution companies have to undertake estimated billing of customers in order to raise revenue to keep them afloat. Noting that these distribution companies are business enterprises and not humanitarian organisations, Mr Mukuolu said outdated policies have denied Nigerians access to constant power supply.