The Ministry of Power, Prof Barth Nnaji, says the ministry will carry out a new power tariff review to subsidise the cost of power for the rural and urban poor in the country.
Nnaji disclosed this in an interview with reporters in Washington on Thursday.
He said the planned review was in furtherance of the Federal Government’s power sector reform.
“There is tariff review and I must even tell you that with this tariff review urban poor and rural dwellers are going to be paying less than they are doing now, that is not something that you find in normal review but it is a way to ensure that things works well.
“And how are we doing that, the federal government is providing subsidy and so on to ensure that there is a cushioning effect on the urban poor and rural dwellers; now they actually pay less while they were paying almost N7.00.
“The true tariff now they pay almost half of that. So, review is not necessarily increase. Review is just marginal. ’’
The minister noted that the proposed new tariff would not only be cost-effective, it would also provide a cushioning effect to the poor people in the society.
Giving a breakdown of the proposed tariff, Nnaji said the middle class in the society would pay at least N11.09 kobo per unit, while the rich would pay more.
“To attract the much needed investment in the power sector, there must be an upward review of tariffs, because there cannot be investment if there is no tariff.’’
He said Nigeria was the second lowest tariff-paying country in sub-Saharan Africa.
He added that to make the tariff increase reasonable, government was working hard to increase capacity by making fuel available.
On what the government was doing to revive the power sector, the minister said that the Federal Government was fast-tracking the Power Reform Act to attract investors.
He listed the formulation of a power purchase agreement; creation of a bulk electricity company; revival of gas allocation strategies; and tariff review as landmark achievements in the country so far.
On the gains of the infrastructure/energy summit held in the last quarter of 2011 in Washington, Nnaji disclosed that General Electric (GE) had signed a Memorandum of Understanding (MoU) with the Federal Government.
The MoU, he said, would see the foremost American energy company generating 10, 000 megawatts of power through equity investment in Nigeria.
He explained that under the MoU, the company would be an equity participant in the generation of power in Nigeria rather than just supplying materials needed for the project.
“In the past, GE only supplies the equipment, but now, they will be investing 10 to 15 per cent in equity for every single project and the government will match them in such investment while the private sector will bring the balance.”
He stated that Daewoo would also execute a turnkey project for Shell and Chevron with an equity investment of 20 per cent.
According to him, the transmission of power in the country will be managed by a Canadian company, while bidders for power distribution contract will be made public in July.
Commenting on capacity utilisation in the power sector in the country, the minister said installed capacity stood at 8.0 megawatts (mw) including those of oil companies and state government projects in Rivers and Akwa Ibom.
He said the largeness of the country was a weakening factor in terms of power supply, but added: ``If fuel is available, power supply will double from 2.8 mw to 4.0 mw.’’