Energy

Osinbajo to Nigerians: Brace up for higher electricity tariffs

…Senate wants commissioning of 215MW Kaduna power plant stopped

…Frowns at N46m daily diesel budget to power it

Vice President Yemi Osinbajo has said Nigerians must brace up for the payment of higher electricity tariffs, insisting that it had become inevitable.

“There is no question at all that we must pay higher tariffs,” he said.

He, however, allayed fears that the increased tariffs would begin immediately.

According to the vice president, the government was not going to increase tariffs soon since it was working towards cleaning up the electricity value chain.

The vice president stated this on Monday at the Sixth Presidential Business Forum held at the Banquet Hall of the Presidential Villa, Abuja.

He said the N700 billion Payment Assurance Guarantee set aside by government was to ensure uninterrupted payment for gas and liquidity in the power sector.

Osinbajo said the payment assurance guarantee was to fund a smooth transition “from where we are to a much more market-determined policy for electricity.”

He disclosed that the government was working with the World Bank on this.

On agriculture, Osinbajo said government would not “bring down interest rate overnight,” pointing out that the “way out is by some kind of intervention, and the president has directed that be done.”

He said the president had directed that a committee be set up to explore the use of government’s intervention funds in agriculture.

The Sixth Presidential Business Forum, which focused on agriculture and its value chains, had the Minister of Agriculture and Rural Development, Audu Ogbe; the Minister of Industry, Trade and Investment, Okechukwu Enelamah; officials of government agencies and stakeholders in the agriculture sector in attendance.

“I’m chairing a committee to look at how to not only use intervention funds but how to monitor the use of intervention funds,” Osinbajo said, explaining that the idea was to ensure that intervention funds went to the right persons.

He said government was also refining the Anchor Borrowers’ scheme and other intervention funds for agriculture with a view to making them more effective in assisting farmers.

The issue of smuggling of agricultural produce into Nigeria was an existential threat to the country’s agricultural sector, he said.

He disclosed that there were about three shiploads of about 120, 000 metric tons of rice coming from Thailand, bound for one of the neighboring countries.

“It is very clear that the rice is meant for Nigeria because they don’t consume parboiled rice; they consume the white broken rice,” the vice president stated, pointing out that “our neighbours do excellent business with allowing rice to come into Nigeria.”

He said a similar thing happened last Christmas when Nigeria blocked about 500,000 metric tons of rice coming into Nigeria from one of its neighbours.

He said Nigeria would go to these countries “as friendly and in a polite manner as possible to ensure that this practice stopped.”

Senate Wants Commissioning Of 215MW Kaduna Power Plant Stopped

Meanwhile, senators on Monday expressed shock at the revelation that the sum of N46 million would be required daily for diesel to power the new power plant in Kaduna.

The Senate, through its Joint Committee on Gas and Power, Steel Development and Metallurgy, headed by Senators Bassey Albert and Enyinnaya Abaribe, respectively, ordered the immediate suspension of the planned commissioning of the 215 megawatts Kaduna Power Plant.

This came amidst Senate’s disagreement with officials of the Power Ministry.

The Senate handed down the order at a very lengthy interactive session with officials of the Ministry of Power and the contractors handling the project.

The upper legislative chamber said it was not convinced with the series of inconsistencies in the contract implementation.

Specifically, the committee rising from the one-day investigative hearing on the ‘Urgent Need to Save the 215 MW Kaduna Power Plant’, frowned at the exorbitant N46 million budget for diesel purchase for the powering of the plant daily.

Every member of the investigative panel raised eyebrows when it was disclosed that the cost would be far cheaper if the plant was to run on gas.

The power plant, which was inaugurated in 2009, is already three years behind the scheduled commissioning.

The lawmakers said they were unimpressed by the reasons given by the Permanent Secretary of the Ministry of Power, Louis Edozie, who defended the change of the parameters of the plant from a gas-powered plant to diesel-powered plant.

Representatives of the Power Ministry, led by the Permanent Secretary, had told the committee that the ministry planned to commission one of the eight units in the plant in January and that the unit would run on diesel.

Chairman of Greenville LNG, Eddy Van Den Broeke, who led his team to address the committee, said the company had a Memorandum of Understanding with the Kaduna Gas Plant to build storage facilities for the plant at no cost.

He also stated that while the plant would produce a kilowatt of electricity at N79 if run on diesel, it would produce the same kilowatt of power at N37 if run on gas.

He said that his company had, as a result of the MoU it signed with the Power Plant, invested the sum of $400 million on its gas plant in Roumuji, Port Harcourt.

He said: “In 2014, when the parameters were signed, it was agreed that LNG is most competitive.

“We have invested $400 million after which people in the ministry decided to change the parameters.

“It will cost $200 million more to use AGO (diesel) because there is no other fuel available that can replace LNG and Greenville.

“I would want the ministry to give me one cent of response on this change of theory.”

He said that apart from the functional gas plant, Greenville already imported 250 trucks meant to evacuate gas to the power plant before the change of parameters by the ministry.

The committee was told that the ministry single-handedly decided to change the parameters of the plant from gas, which was the original design, to diesel which would eventually jerk up the cost of power at the plant.

Co-chairman of the Joint Committee, Senator Albert Bassey, told the Permanent Secretary to inform the Minister of Power, Works and Housing that the Senate had put a stop to the planned commissioning.

“I feel very disappointed. Please tell your minister to stop the process of commissioning because the project cannot be ready even by mid next year.

“We are insisting that it will be cheaper to run the plant with gas and gas is environmentally friendly. Let your minister know we cannot be taken for granted,” he said.

Chairman of Committee on Power, who is also co-chairman, Senator Abaribe, also decried the decision of the ministry to change the parameters of the plant from the cheaper gas to diesel, which was largely imported.

He said the ministry should put the planned commissioning on hold to enable the committee to embark on a further physical examination of the plant.

“We have heard a lot of disturbing things and we have all seen that we have put the cart before the horse.

“Everyone in this hall today has now seen why we ask questions. We ask questions when things don’t seem to be going the right way.

“You see one price at N79 and the other at N35, why do you go for the higher cost which is not cost effective?

“If you are going to spend N46 million daily to run a plant and you said it is temporary, that is not effective.

“If you start one plant and the rest don’t come up in eight years, we need to save this project from becoming another white elephant project.”

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