Minister of Power, Works and Housing, Babatunde Raji Fashola, SAN, has declared that the National Assembly “lacks the constitutional power to stop the Nigerian Electricity Regulatory Commission (NERC) from reviewing electricity tariffs.”
The minister who spoke against the backdrop of the recent tariffs increase in electricity, stated this while fielding questions from the newsmen after defence of his ministry’s budget yesterday.
He said NERC was constitutionally empowered to set new electricity tariffs for consumers in the country, stressing that the relevant laws backing NERC were passed by the National Assembly.
He said: “The law passed by the National Assembly clearly gives NERC the responsibility and power to give a tariff that enables them to recover their investment and returns on investment.
“So, nothing unlawful or illegal has happened. So, I think it was the way it was managed before we came and the review every two years.”
The two chambers of the National Assembly had, on Sunday, warned NERC to halt plans to implement the new electricity tariff regime in the country, following a motion passed by the House of Representatives mid December, last year.
Speaking on the importance of federal government’s strategic partnership with the private sector in order to generate more electricity, Fashola said: “People have been hearing for the past 20 years that power projects are over 99 per cent complete. It is absolute nonsense. As far as I am concerned, the ultimate thing is to get into work.“One per cent or 99 per cent, we need to get it to work and the best way to get it to work in the interest of Nigerians is to enter into any form of partnership and we will look into that.
“It is not about what I think and I said this much before. Whether we have electricity or not, is not about what all of us agree we must do. Elecricity is a product. It is made from raw materials. Some of the raw materials are gas, some of the raw materials are power plants and they are also related.
“So, the issue of tariff is the single issue of price. When the raw materials go up, the price cannot stay the same. You may ask why can’t we have more power before the price goes up?”
Continuing, he said: “I am also a consumer, but we see that investments in power are not where they should be and part of the reason why government opted for privatisation was to get more private capital.“If the recovery price and the income and profit do not make economic sense to the investor, would you do that business if you are the one? So, it is not what I want, it is what I think will solve the problem, everybody owes everybody in the power equation and they are also owing banks.
“There are a lot of investors who want to pay a little more than the open market tariff. If we want them to come into the industry, we have to allow the new tariff order which allows for embedded order.
“There are a lot of people producing excess power. They want to put it on the grid but the price must be right. In the process of privatisation, government was perhaps unwilling to confront Nigerians with the real market price so they were reviewing the price every two years.”
He added: “That gave the impression that price is reviewed every two years, but that should not have been. Government should have told us what the price was. What we have now is a 10 year tariff. So, it is not going to be changing every two years. There are indices that will affect the need to change either up or down.”