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New law to make Nigerians pay more for electricity underway

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A new law being proposed by the National Assembly as part of an amendment to the Electric Power Sector Reform Act (EPSRA) may compel electricity generation companies to fund host communities with five per cent of their revenue, thereby further increasing the cost of electricity in the country.

The bill, sponsored by Babajimi Benson, representing Ikorodu Federal Constituency, provides for the reservation of five per cent of the revenue accruing from power generated by the power generating companies for the development of host communities.

The proposed legislation, which was read for the first time on February 23, 2020, has passed for second reading as a draft seen by The Guardian showed that the fund would be received, managed and administered by a Trustee to be appointed by the generating companies (GENCOs) and representative of the host communities, upon agreement among the host communities.

Coming amid existing tax burden, which includes a corporate tax rate of 30 per cent, education tax of two per cent, police tax, land use charge and other levies at states and local councils, a source at one of the power generation companies told The Guardian that the development may force the companies to declare force majeure.

Reacting, some stakeholders in the sector said the development would exponentially increase electricity tariff as the companies may add up the fund as operating expenses and pass the burden to the end-users. However, other stakeholders stressed that the move would lead to the development of communities housing power generation companies.

While the outlook of the power sector has remained dismal, performing far below expectations and projections since privatised in 2013, some stakeholders insist that confusion awaits the sector, especially in the areas of legal and regulatory framework if the new bill scales through.

Recall that pursuant to the EPSRA, the Nigeria Electricity Regulatory Commission (NERC) is empowered to regulate the electricity sector, including generation, transmission, system operations and distribution.

Also, in line with Section 32 of the Act, the Commission is saddled with the responsibilities of creating and promoting efficient market structures, ensuring the optimal utilisation of resources, maximising access to ensure an adequate and secure supply of reliable electricity while promoting competition and private sector participation. Part of its duties also includes the establishment of appropriate operating codes and standards, issuance of operating licenses, monitoring the operation of the electricity market, and getting the Nigerian Electricity Supply Industry (NESI) contracts effective as key path to sustainability.

While the tariff at which the generation companies sell their power is determined based on operations and maintenance, gas, depreciation of generation assets, other plant maintenance costs, experts said that an additional provision for five per cent of the revenue of the GenCos as proposed by the bill, changes the parameters influencing the tariff of the generation companies as it has to be included in their tariff model. 

The cost would be passed on to the consumers, with a predominant effect in an increase in end-user tariff. 

An associate professor of Energy Law at the University of Lagos, Yemi Oke insisted that the development would naturally be captured as part of the overall cost and transferred to the distribution companies, who would likewise pass it to electricity consumers.

“DisCos or GenCos don’t pay taxes, levies and charges directly. All those are passed to consumers. The end product is a further increase in electricity tariffs. The question is: are Nigerians willing and ready to continue paying more for darkness?

“From privatisation till date, which happened some 13 years ago, what has been added to the national grid and transmitted as new megawatts is less than 5000 megawatts despite all the noise and other marketing hypes from sector players and regulators,” Oke said.

  

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Former Ogun First Lady celebrates 96th birthday

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Mama Lucy Onabanjo, wife of the first civilian Governor of Ogun State, the late Chief Victor Olabisi Onabanjo (Aiyekooto) celebrated her 96th birthday on Tuesday.

Lucy Onabanjo is the oldest surviving former first lady.

Born in Ijebu Ode on October 26, 1925, Mama Onabanjo was trained as a teacher.

It was after her training as a teacher that Lucy started dating the Late Bisi, who was working with a local newspaper called Gaskiya Tarfi Kobo (Truth is more than a Kobo).

Few months after meeting Bisi , she walked down the aisle and said “I do.”

The humble ceremony would blossom into a life of civil service from teaching to the Government House, Abeokuta and beyond.

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It’s illegal to pay petrol subsidy from federation account, Sanusi tells FG

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Former Emir of Kano, Alhaji Muhammad Sanusi II, has said the federal government is indulging in illegality by paying petroleum subsidy from the federation account.

The former Central Bank of Nigeria (CBN) governor spoke virtually as a panelist on Sustainable Development Goals (SDGs) at the just concluded Nigerian Economic Summit held in Abuja.

He also said the Nigerian daily oil consumption data is suspect thus there is endemic corruption in fuel subsidy payments.

“This money coming from petrol belongs to the federation account, and the federal government doesn’t have the constitutional right to pay subsidy on behalf of the federation.

“So it is a fundamental constitutional issue because this is money that should go to the federal, states and local governments. Yet money that belongs to the federation is carried out as federal government expenditure. So, there are so many complex issues, legal and economic issues. We need to stop these issues” he said.

He also advocated for the end of fuel subsidy and electricity subsidy, saying the money saved should be invested in critical sectors like education and health adding that the long-term gains far outweigh the short-term pains.

“I have said this before even as a CBN Governor under the previous government. What I say is not of a particular government. Take petroleum subsidy.

“In 2015 or 2016, Minister Ibe Kachukwu said Nigerian was importing 30 million litres of PMS per day after eliminating corruption. In 2019, the NNPC said we are importing 59 million litres per day after oil prices have gone up. And I have been asking the question, what happened between 2015 and 2019 that our oil consumption has almost double?” he asked.

He noted that “this is what also happened under the previous government. When oil prices go up, NNPC said they are importing more because of the arbitrage. Thus, when the oil prices go high, there is an incentive to inflate the number” he noted.

On electricity tariff, he said it should also be stopped as even poorer countries are paying cost reflective tariffs and enjoying uninterrupted electricity.

The Chairman, the Nigerian Governors Forum and the Governor of Ekiti State, Mr. Kayode Fayemi, also agreed that subsidy payments had to end for resources to be free up for critical investments.

He also said that the government must focus on education and healthcare provision.

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PHOTOS: South-west govs visit Tinubu

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