- Nigeria Targets Cost Reflective Tariff By 2021
Ahead of the July 1st, 2020 when a new electricity tariff will come into effect, a critical stakeholder in the sector, Oti Ikomi, Chief Executive Officer, CEO, and Executive Vice-Chairman Proton Energy has assured Nigerians of a more stable and improved power supply.
Ikomi while speaking on a CNBC Africa program monitored by The New Diplomat posited that though it might be difficult at first, the overall benefit will be enjoyed by all.
‘These are very unusual times for Nigeria and the world at large. We have to move towards a situation where consumers pay for what they consume. There is a cost to the production of power, when an individual runs on a generator, the cost is up to four times the cost of an on-grid power supply and because of the inequality in the value chain, it has not been properly balanced. The good thing is that the lowest cadre of pricing which is R1; for those who use the minimal amount of power, there would not be any changes.
Overall, the cost of purchases should be more affordable, it might be difficult at first, but as time goes by, consumers will begin to see a higher quality in power generation, there will also be a steady increase in numbers of hours that there will be supply, these are the things that consumers will benefit when the new tariffs take effect from July 1st, 2020, it was delayed for three months’ he said.
He also spoke on the plans of the Federal Government to target a cost-reflective tariff by 2021.
‘There is now a harmony between the Minister of Power, Minister of Finance, the Presidency, Nigerian Bulk Electricity Trading Plc, NBET and Nigerian Electricity Regulatory Commission, NERC because they are all pursuing the same goal.
The key issue right now is that there are some key facts on the ground, the Minister of Finance, Budget and National Planning, Zainab Ahmed with the Central Bank of Nigeria, CBN governor, Godwin Emefiele in the country’s letter of intent for the International Monetary Fund, IMF loan specifically mentioned that Nigeria will move towards a cost-reflective tariff by 2021 starting by the plans by NERC this year, And as Nigerians begin to see the increase in power, as efficiency comes into the market, the price will begin to go down’ he said.
In response to COVID-19 realities, Nigeria’s electricity regulators shelved an initially planned April tariff hike by another three months.
Recall that Proton Energy in its resolve to boost power supply and contribute to the National Grid has undertaken the construction of a 150 megawatts power project in Sapele, Delta State. Adhering to its Corporate Social Responsibility principles, top executives of Proton Energy led by Ikomi had recently met with the Orodje of Okpe, His Royal Majesty Felix Mujakperuo (rtd Major-General) with representatives of the Delta State government led by the Permanent Secretary, Ministry of Power and Energy, Dr. A.F. Onajeta in attendance.
Others present included Mr. Uche Okoli, Executive Director, Proton Energy; Mr. Z. Demirovic of SIEMENS and Mr. Chu of CMEC, a Chinese company.
The energy company which began operations in 2011 aims to add 1500MW of installed capacity to the national grid as part of its plan to deepen energy supply in Nigeria and parts of Sub-Saharan Africa. The 150 MW power plant under development in Sapele is expected to be expanded to 500 MW when the second phase of the project comes on stream. It is projected that with Proton’s aggressive resolve and commitment, its capabilities would help enhance national grid stability.
