By Ejiofor Alike – Thisdaylive news

The Power Holding Company of Nigeria (PHCN) will generate average revenue of N22.5 billion monthly from the new electricity tariff that took effect from June 1, 2012.

The Minister of Power, Prof. Bart Nnaji, said Monday that this figure was the irreducible amount the ailing power utility company requires in order to meet its obligations to primary suppliers like Shell, Agip, Ibom Power, National Integrated Power Project (NIPP) and the Nigerian Gas Company (NGC).

The monthly PHCN revenue, which was N11.8billion when Nnaji assumed office in July 2011, moved up to N15.6billion in December 2011, but declined to N12.8 billion in January 2012, apparently due to the protest against the removal of petrol subsidy. Since the end of the national protest against the removal of subsidy, the figure has been hovering around N15billion.

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But in a paper titled: “Electric Power in Nigeria: The Sun on this Rubble,” Nnaji told participants in the Executive Intelligence Management Course 5 at the Institute for Security Studies in Abuja, that PHCN has been paying the International Oil Companies (IOCs) only 50 per cent of their services.

“Should the IOCs be forced to carry out their long standing threat of stopping further supplies to the PHCN, it will be calamitous for the whole nation,” he said.

Nnaji said more investments were critically needed in the power sector, stressing that fresh investments of $10billion yearly were needed for the next decade to enable the country to generate 40,000megawatts of electricity by 2020.

“We must encourage companies like Shell, Agip, Siemens, Daewoo, GE and the rest to continue to have confidence in our country. After all, return on investment is much higher in Nigeria than in practically every country in the West. Investors in infrastructure are doing quite well, as demonstrated by those who have invested in telecommunications in the last decade. The power sector is the next theatre of action,” he said.

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Nnaji said the periodic major review of electricity tariff under the Multi-Year Tariff Order (MYTO) methodology did not necessarily imply an increased payment by every consumer.

For instance, he said in the second MYTO, which came into effect on June 1, the less privileged ones in the society, who consume 50 kilowatts hour or less in a month now pay less. “They now pay N4 per kilowatt hour, instead of N7.
Meters are now to be given them free of charge. They are no longer required to pay either for meter maintenance charge or fixed charge. In this year’s budget, there is a provision of almost N50 billion subsidy for low income earners,” he added
He noted that the middle class now pays a slight increase of 11per cent.

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Nnaji however said this subsidy must be differentiated from the petrol subsidy because, among other differences, there is no cash involvement at all in electricity subsidy.

According to him, all the government has tried to do is to prevent the less-privileged from paying heavily for electricity consumption, which is an item of need, and not an item of want.

He noted that the middle class now pays a slight increase of 11per cent, adding however that the rich people and other high end consumers now pay a cost reflective tariff.


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