Electricity is a crucial element for the economic and social growth of Nigeria, and recent discussions at a stakeholder meeting in Abuja shed light on the challenges facing the sector. Sanusi Garba, Chairman of the Nigeria Electricity Regulatory Commission (NERC), emphasized that the current investments in the power industry are inadequate to ensure a stable supply of electricity nationwide. Issues such as fluctuating exchange rates and non-payment for gas pose risks of a potential sector collapse if immediate actions are not taken.
Prior to the tariff revision, power distribution companies were only required to pay 10% of their energy bills, leading to liquidity challenges and further contributing to the decline in gas supply and electricity production. The ongoing cash flow difficulties plaguing the sector are resulting in a continuous decrease in production and a heightened risk of power outages.
The increase in tariffs, which now require a cost recovery of 94% by 2023, is driven by factors like exchange rate unification and inflation. Sanusi Garba highlighted the significant financial implications of subsidies, projecting a colossal burden on the government amounting to an estimated ₦3.2 trillion by 2024.
The recent adjustments in tariffs are viewed as critical measures to prevent a complete sector collapse. MP Victor Nwokolo, Chairman of the Committee, underscored the importance of dialogue with NERC and DISCOS officials to find sustainable solutions to the existing challenges.
It is evident that there is an urgent need for reforms within the Nigerian electricity sector to ensure a reliable and consistent energy supply. Ongoing conversations among government entities and industry stakeholders are vital in formulating strategies that will guarantee the sustainability of this vital sector for the national economy.
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