A former Managing Director of the Nigerian Bulk Electricity Trading Limited (NBET), Mr. Rumundaka Wonodi, has said that the proposed sale of five power generating plants by the federal government will not solve Nigeria’s perennial supply challenges, especially in the short-term. Wonodi, however, described the recent moves to dispose of the assets as more of a revenue generation drive, rather than stabilising the sector.
He advised that more states should be actively involved in getting experts to boost power supply in their respective domains.
The federal government had recently approved the sale of five generating companies – Geregu, Benin (Ihovbor), Calabar, Omotosho and Olorunsogo power generation companies, built under the National Integrated Power Project (NIPP).
Speaking yesterday on ARISE NEWS Channel, THISDAY’s broadcast arm, Wonodi added that the sale of the plants would deepen the reforms in the sector as well as get the government out of operating power plants.
He, however, stated that the step was not the magic wand needed in the industry.
“Selling the five out of the 10 power plants will deepen the reforms. But in the short-term, I do not think that it is going to make any difference in power supply.
“It is also a revenue thing for the federal government, which has always shown that on the income side, the sale of these assets will boost government revenue,” he said.
According to him, the government has embarked on a new push that has seen the cancellation of the former arrangement with the former preferred bidders and is commencing fresh process.
“I think that honestly it is more about government revenue now than immediate power improvement,” he said.
Wonodi stated that state governments should begin to focus on creating the enabling environment for businesses to thrive because by so doing, the purchasing power of Nigerians will improve, which will ultimately reduce the incessant resistance to hike in electricity tariffs.
He said: “This is because at the end of the day, if you can attract manufacturing companies, then the economy will grow and the employed citizens will be more likely to pay N60 per kilowatt than the unemployed citizen who’s only willing to pay N10.”
According to him, the provision of subsidy on electricity tariffs by the government remains a sour point that is unsustainable.
“And this is one of the things that we have done or we have not done very well, which is to provide subsidy for consumption rather than for production,” he said.
He attributed the resistance to electricity tariff hike to inflation that has eroded the incomes of most families, with many Nigerian homes now spending over 70 per cent of their income on food.
“Therefore, whenever the regulators raise tariffs, there’s a push back. That push back is not just because you know power is not being supplied, but the fact is that people cannot afford to pay any anymore.
“As the foreign exchange continues to go up and there’s inflation, the Nigerian Electricity Regulatory Commission ( NERC) by its rules and regulations is required by the Multi-Year Tariff Order (MYTO) to adjust the tariff and most times it is going up. With this kind of push-back, we will never have the cost-reflective tariff,” he said.