Daily Trust - the online edition

Electricity tariffs in the country are expected to rise steeply in the next three years following yesterday’s approval by the Federal Executive Council of a new Multi-Year Tariff Order (MYTO) for electricity tariffs, to take effect from July 1, this year. The council also approved a N177.95 billion subsidy to cushion the effects of the new electricity tariff regime for the next three years.

A statement issued after the council meeting by the Special Adviser on Communications to President Umaru Musa Yar’adua, Mr. Olusegun Adeniyi said N64.84 billion has been approved for subsidising electricity consumption by Nigerians in the 2008/2009 period, while N77.41 billion and N35.80 billion have been approved for the 2009/2010 and 2010/2011 periods respectively, making a total of N177.95 billion  subsidy over the three-year MYTO transition period. Under the new tariff order, consumers will not immediately have to pay more for electricity as the Federal Government will establish an MYTO Support Fund to cover the power sector’s revenue shortfalls during the three-year transition period, Adeniyi said.

However, experts say electricity tariff may quadruple after the three-year subsidy period as MYTO is a market-oriented power-supply system aimed at boosting the confidence of lenders and investors alike in the profitability of investments in Nigeria’s power  sector as it provides for reasonable returns on capital investment, and the correct pricing of power.

MYTO, developed by the Nigeria Electricity Regulatory Commission (NERC), is predicated on the quantification of the total revenue requirements of all power industry participants. In approving its gradual implementation, the Federal Government recognized that correct pricing for the commercial viability of Nigeria’s power industry was of critical importance to the urgent resolution of the twin problems of inadequate and unreliable electricity supply, Adeniyi said. According to him, "It is expected that with the full implementation of the MYTO, the current situation in which the power industry is unable to generate enough revenue to cover its operating costs, undertake regular maintenance and make new investments, will become a thing of the past."

The President had at his meeting with state governors Tuesday got their consent for a  massive injection of funds into the power sector for the rapid expansion of Nigeria’s power generation, transmission and distribution infrastructure. Adeniyi further said "President Yar’adua remains fully and constantly engaged with the resolution of Nigeria’s power supply problems. He wishes to reassure all Nigerians that his administration is doing everything possible to ensure that stable power is achieved within the tenure of his administration."

Also yesterday, Secretary to the Government of the Federation Ambassador Baba Gana Kingibe said President Yar’adua has been devo-ting one-third of his time to issues related to solving the nation’s lingering energy crisis since he assumed office eleven months ago. Speaking at the First Annual International Association for Energy Economics conference in Abuja, Kingibe said the Yar’adua administration "is creating the enabling environment for developing the energy sector" at the moment.