CBN Favours 200% Increase in Electricity Tariffs

Governor of the Central Bank of Nigeria (CBN) Mallam Sanusi Lamido Sanusi yesterday called for an immediate increase of 200 per cent on the current N7 per a unit of electricity.
Sanusi argued that this is a sure way of reviving the power sector, saying the present rate is not competitive enough to bring the country out of its energy demand shortfall. If implemented by the government, a unit of electric power will cost consumers N20 instead of the current N6 to N7 per kilowatt hour.
Sanusi spoke while answering questions from State House correspondents in Abuja.

For the power sector to function properly and attract the much needed foreign investment, there is need for a viable regulator, the CBN governor said. He called for the immediate revival of the National Electricity Regulatory commission (NERC) to oversee the moribund sector.
Citing the N22 price charged per a unit in Ghana as an example of modern global reality, he said the present N7 price is against the grain of global practice.
“I am saying we got to have a regulator; we got to have good input for gas pricing. It will encourage investment, deregulate electricity prices.

“This N7 is a myth because nobody gets power at that price. Ghana is paying N22. If we increase it to N22 and you increase gas prices, investments will come into power," he argued.
Sanusi also said the Assets Management Company of Nigeria (AMCON) Act would soon return Nigeria banks to the world stage through a credible balance sheet.
The CBN is "doing what we need to do on the banking system and the banking system is stabilising and with the AMCON and once we recapitalise the banks, it will improve the balance sheets of bank and the banks will be back up," he explained.

He noted that the capital market has been recovering fast and the government continues to make progress as far as the reforms are concerned.
The CBN boss went further to state that "the financial system does not live in isolation. You got to fix the issues of the economy and the CBN is not responsible for that. You have an economy in which you do not have power. If you don’t have electricity you cannot attract investors, you cannot improve production.
“We don’t have power because the reforms that ought to have been carried carried out in four years have not been done. We keep talking and talking and talking and we have not yet created the right environment and we don’t even have a regulator for power," he added.

Sanusi stated that the regulatory agency, NERC, had been hamstrung for sometime. "It’s not functioning. And how can you have a sector like power when you don’t have a regulator? It has been suspended for how many years?".
Noting that the nation spends N500 billion subsidies on petroleum products yearly, he said nobody will invest in refineries if they believe that their business model is predicated on government subsidy.

“We are borrowing N500 billion on subsidies every year, we are borrowing money and we are leaving future generation to pay the debt and the benefits of this subsidies are far outweighed by the long term cost to the economy," he said.
The reality "is that the government is not pursuing the right economic policies and nothing in the banking reform will fix the economy unless you fix policy and I say this as an adviser to the government".