April 19, 2018 / 10:18 AM / 3 months ago

Nigeria plans power tariff overhaul by 2021 to attract investment

LONDON, April 19 (Reuters) - Nigeria plans to overhaul its energy tariff system by 2021 to try to attract investment and improve power supply, the vice chairman of the country’s electricity regulator said.

Only about half of the 190 million people in Africa’s most populous country have access to power. The problem has been exacerbated by prices that are capped below what it costs to generate and deliver power.

Nigeria’s ailing power infrastructure, which forces businesses and households to run costly fuel generators, is often blamed for hobbling growth and is likely to be major issue in campaigning ahead of next February’s presidential election.

Sanusi Garba, vice chairman of the National Electricity Regulatory Commission (NERC), told a panel at the Developing Market Associates’ UK-Nigeria Trade and Investment Forum in London that NERC had devised a “recovery plan” that would fix the tariff issue.

“Under the plan, by 2021, tariffs, regular tariffs, will reach parity with cost-reflective tariffs,” Garba said.

He said increasing tariffs was difficult given the lack of regular power supply and the relatively few paying customers on the system; he said there are currently just 8 million customers on the billing platform.

“The few that are paying are actually paying for others that are not paying,” he said of the current system.

Garba said the reset plan would bring in more investors in order to add generation capacity, diversify power sources away from the gas that most of the grid relies on now, expand the transmission system and, crucially, add 10 to 20 million customers to the billing platform.

He said that while investments were currently stalled, the government would soon invite utilities to submit the investments they need so the government can choose the most crucial projects, facilitate outside investment - and hold those who do get the money accountable for what they do with it.

Garba said the potential millions of new customers, was a “tremendous opportunity” for those looking to place money in Nigeria. (Editing by Alexis Akwagyiram and Mark Potter)

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