Electricity, Fuel Hike: More prosperous days will come soon – Lai Mohammed

 

The minister of information and culture, Lai Mohammed, has appealed to Nigerians to be patient with the President Muhamadu Buhari-led administration saying better days are ahead.

 

During a meeting with online publishers in Lagos, Saturday, Mr Mohammed said the simultaneous increase in both the pump price of fuel and electricity tariff was “a mere coincidence.”

 

“First, the deregulation of PMS prices was announced on 18 March 2020, and the price modulation that took place at the beginning of this month was just part of the on-going monthly adjustments to global crude oil prices,” said Mr Mohammed.

 

“Also, the review of service-based electricity tariffs was scheduled to start at the beginning of July 2020 but was put on hold so that further studies and proper arrangements can be made.

 

“Like Mr President said at the opening of the last Ministerial Retreat, this government is not insensitive to the current economic difficulties our people are going through and the very tough economic situation we face as a nation. We certainly will not inflict hardship on our people. But we are convinced that if we stay focused on our plans, brighter and more prosperous days will come soon.”

 

Mr Mohammed said in comparison to other countries in West and Central Africa, fuel prices and electricity tariff are cheapest in Nigeria.

 

“The drastic fall in the revenues of the government explains why the government had to take certain tough decisions, even as it is acting to mitigate the effect of the economic slowdown by adopting an Economic Sustainability Plan. One of such difficult decisions, which we took at the beginning of the Covid-19 pandemic in March – when oil prices collapsed at the height of the global lockdown – was the deregulation of the prices of PMS,” he said.

 

“Recall that the benefit of lower prices at that time was passed to consumers. Everyone welcomed the lower fuel price then. Again, the effect of deregulation is that PMS prices will change with changes in global oil prices.

 

“This means quite regrettably that as oil prices recover, there will be some increases in PMS prices. This is what has happened now. I am sure Nigerians will prefer to pay slightly higher for PMS than to queue for hours just to get the products at higher prices.”

 

According to the minister, the effect of the changes in the international prices of crude oil on local fuel prices will not last forever.

 

“Modular refineries are beginning to come on stream in the country, and this will help lower the cost of petroleum products,” he continued.

 

“Next month, the Waltersmith Modular Refinery in Ibigwe, Imo State, will be commissioned, starting with refining 5,000 barrels of crude per day and increasing rapidly to 50,000 barrels of crude. Many more modular refineries are also in different stages of completion across the country, in addition to the 650,000 barrels per day Dangote Refinery.

The deregulation will bring more investments into the sector, to the benefit of Nigerians.”

 

For the increased tariff, Mr Mohammed said that due to the problems with the largely-privatized electricity industry, the government has been supporting it.

 

“To keep the industry going, the government has so far spent almost 1.7 trillion Naira, especially by way of supplementing tariff shortfalls. The government does not have the

resources to continue along this path. To borrow just to subsidize generation and distribution, which are both privatized, will be grossly irresponsible.

 

“But in order to protect the large majority of Nigerians who cannot afford to pay cost-reflective tariffs from increases, the industry regulator, Nigerian Electricity Regulatory Commission (NERC), has approved that tariff adjustments had to be made but only on the basis of guaranteed improvement in service.

 

“Under this new arrangement, only customers with guaranteed minimum of 12 hours of electricity can have their tariffs adjusted. Those who get less than 12 hours supply will experience no increase. This is the largest group of customers.

 

The minister said the government has noted the complaints about arbitrary estimated billing and that a mass metering programme is being undertaken to provide meters for over five million Nigerians, largely driven by preferred procurement from local manufacturers, and creating thousands of jobs in the process.

 

“NERC will also strictly enforce the capping regulation to ensure that unmetered customers are not charged beyond the metered customers in their neighbourhood. In other words, there will be no more estimated billings.

 

“The government is also taking steps to connect those Nigerians who are not even connected to electricity at all. As you are aware, under its Economic Sustainability Plan, the government is providing solar power to 5 million Nigerian households in the next 12 months. This alone will produce 250,000 jobs and impact up to 25 million beneficiaries through the installation, thus ensuring that more Nigerians will have access to electricity via a reliable and sustainable solar system.”