FG Disagrees With World Bank, That Nigeria Spent $1.5b On Electricity

The government demands that SBT increase collection by N65 billion and 600,000 meters.

Ahmad Rufai Zakari, the President’s Special Adviser on Infrastructure, yesterday slammed a World Bank study claiming that the Federal Government spends at least $1.5 billion to address the country’s electricity shortage.

According to the presidential aide, the World Bank report, which also reported that 78 percent of power users in Nigeria have less than 12 hours of regular electricity supply, was unfounded.

Although the World Bank reported that the Nigerian government is currently subsidizing the power sector with about $1.5 billion, mostly due to tariff shortfalls, Zakari told The Guardian that the newly implemented Service-Based Tariff (SBF), which increased end-user electricity bills, improved market liquidity by about N65 billion in January.

Last week, the World Bank told journalists that Nigeria has the highest number of citizens without access to electricity, and that the sector has a $29 billion annual sales deficit.

The Federal Government, on the other hand, maintained that the World Bank’s methodology for calculating the statistics was vague, and that power delivery to customers has been gradually improving.

Nigeria privatized its electricity sector in 2013 in order to turn the industry around. However, seven years after privatization, the industry has declined. Last year, the Federal Government raised the electricity tariff on the promise of improved supply. However, the service has been poor as a result of a series of issues that have hampered generation capability.

Nonetheless, Zakari argued that the World Bank’s claim that 78 percent of Nigerians have less than 12 hours of regular electricity access is misleading, citing empirical evidence from the Nigerian Electricity Regulatory Commission (NERC) that only 55 percent of people linked to the grid are in tariff bands D and E, which have less than 12 hours of supply.

“It is incorrect to state categorically that 78% of Nigerians have less than 12 hours of daily power access. According to NERC data, 55% of people connected to the grid are in tariff bands D and E, which have a supply of less than 12 hours. Before DisCos can increase supply, those people will be completely subsidized to pre-September 2020 tariffs. The Central Bank of Nigeria (CBN) has set aside N120 billion in capital expenditure (CAPEX) funds for DisCos to upgrade infrastructure for these tariff classes, similar to the ongoing metering program,” Zakari said.

He also maintained that the World Bank’s argument that 58% of electricity customers in the country do not have meters was untrue.

“It’s unclear who conducted this survey or when it was conducted,” he added. All people who have received free meters have expressed satisfaction with the reform process. More than 600,000 meters have been shipped to DISCOs so far, out of a total of one million in phase 0 that are still being installed. Locally sourced meters are generating employment in the installation and manufacturing/assembly industries.

“Bands have been communicated to all customers, and bands will be published during billing. Anyone who claims that four out of five Nigerians are not intelligent enough to understand tariff classes and what they are paying for is delusory.”

Regarding the sector’s improvement after the tariff increase, Zakari stated that SBT increased aggregate average tariffs by 36%, while DisCo collections increased by more than 60%.