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Nigeria moves planned electricity tariff hike to Q1'2021
Nigeria’s planned electricity tariff hike which was earlier scheduled for the first of July has been postponed until the first quarter of 2021. This decision was taken by the leadership of the National Assembly after a meeting with the regulators NERC, and representatives of electricity distributors. George Etomi, Director of the Eko Electricity Distribution Company joins me to discuss this story and more.
Wed, 01 Jul 2020 11:34:58 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Addressing issues across the entire value chain from gas to generation to transmission to distribution before implementing a cost reflective tariff
- Need for government alignment to relieve financial burdens and attract investors back to the market
- Importance of stakeholders working together towards a seamless network for a sustainable electricity market in Nigeria
In a recent development, Nigeria has decided to postpone the planned electricity tariff hike until the first quarter of 2021. This decision comes after a meeting between the leadership of the National Assembly, regulators NERC, and representatives of electricity distributors. George Etomi, Director of the Eko Electricity Distribution Company, sheds light on the reasoning behind this postponement. According to Etomi, the move is not simply kicking the can down the road but rather a realistic approach to address the current challenges faced by the electricity market in Nigeria.
The key points discussed in the interview revolve around the need to ensure the entire value chain in the electricity sector is properly aligned before implementing a cost reflective tariff. Etomi highlights the importance of addressing issues from gas to generation to transmission to distribution. One of the critical areas of concern is the metering problem, which has led to a cycle of price fixing that creates challenges for both electricity distributors and consumers.
Furthermore, Etomi emphasizes the significance of having all stakeholders on the same page and working towards a seamless network. He explains that any rush into a tariff increase without addressing these underlying issues could potentially lead to more problems, including litigations and arbitrations. The ultimate goal is to create a solvent value chain that will attract investors back to the market and relieve the government of its financial burden in bridging the revenue shortfalls.
One of the conditions discussed in the interview is the need for government alignment. Etomi points out that it is in the government's best interest to ensure that the entire value chain functions effectively to avoid ongoing financial burdens. He mentions that the privatization of the electricity sector was initially based on a cost reflective tariff model, and it is crucial to work towards achieving this goal for the sustainability of the market.
While the decision to postpone the tariff hike may seem like a delay, it is a strategic move to address fundamental issues within the sector before implementing significant changes. Etomi expresses confidence in the ability of all stakeholders to work together towards a common goal and navigate through the challenges ahead.
As negotiations continue between stakeholders to resolve the issues in the value chain, the focus remains on creating a stable and efficient electricity market in Nigeria. The alignment of gas supply, generation, transmission, and distribution is essential in transitioning to a service reflective tariff model that benefits both consumers and investors. By taking the time to address these challenges, Nigeria aims to set a solid foundation for sustainable growth in the electricity sector.
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