The World Bank has informed that Nigeria’s electricity tariff shortfall may rise to over Three Trillion by 2023.
This statement was made in a Presentation on Wednesday by the ‘World Bank’ Senior Energy Specialist, Muhammad Abba Wakil, titled, Power Sector Recovery is even as the current tariff policy – Nigeria’s Electricity Supply Industry (NESI), is yet to allow the cost-reflective model.
The Senior Energy Specialist to the World Bank Muhammad Abba Wakil, in his presentation titled, Power Sector Recovery Programme (PSRP): A More Just and Fair Tariff Policy, said if the policy persisted, government might require N3.4 trillion to fund the tariff gap.
The Specialist disclosed this while explaining the content of a fact sheet on tariff shortfall during a virtual media workshop. He emphasized that by implication, the cumulative tariff shortfall would be five times the 2020 budget allocation for Education and seven times the allocation for Health.
The Senior Energy Specialist pointed out that the Federal Governments intended to ensure tariffs are kept low to help the economically disadvantaged in Society pay their electricity bills, however the Government noticed that a chunk of this support went to the Upper Class who did not require support with paying their bills and the Lower Class which it was aim at benefitted little or nothing.
“The factsheet states that only 22 per cent of poorest households are connected to the grid, stressing that:
‘For every N10 the government spends on meeting the tariff shortfall, N8 goes to the richer households who don’t need help paying their bills.’
Wakil noted that if sector performance and discipline were not improved, government might need to provide the required sum to support the sector by 2023.
He went on to state that due to erratic power supply, businesses in Nigeria lose about $29 billion annually. “An average Nigerian consumes four times less energy than her counterpart in a typical lower middle-income country”. Businesses in Nigeria lose about US$29 billion annually because of unreliable electricity. In view of this, he said the PSRP is a comprehensive response to Nigeria’s power challenges.
Wakil says”Its aim is to renew Nigeria’s economy by rebuilding a functioning and fair power sector. Given the enormity and complexity of issues, the government decided to first focus PSRP on the distribution segment since it is the most pressing sector constraint.”
Adding that, between June 2020 and February 2021, the World Bank Board had approved $1.25 billion financing to support the government in its efforts to reset the power sector.