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Why Electricity Tariff May Remain High

There are hints that the electricity tariff may not become as cheap as many Nigerians hope for.

Speaking after an inspection of Olorunsogo Power Plant, in Ogun State, while reacting to complaints of increased electricity tariff, the Managing Director of Niger Delta Power Holding Company, Mr. Chiedu Ugbo, stated that end-user tariff should take into consideration cost associated with distribution, transmission and generation along the value chain. He said, “Electricity is a commodity and it has to be paid for.

Electricity is a commodity and has cost associated with its distribution, transmission and generation along the value chain. The final cost is eventually borne by the end user, except if the government decides to intervene in the form of subsidies.

Gas cost forms about 70 per cent of every investment we have. So whatever tariff is agreed between the distribution company and the Nigeria Electric Regulatory Commission (NERC) must have taken into consideration the cost of gas across the value chain.

We are also looking for ways to evacuate electricity from our sub-stations to end users and we know Lagos is one of the most populated cities. We want to take electricity there and we also know the demand is higher in Lagos.”

Ugbo also stated that NDPHC and Ibadan Distribution Company have a working arrangement, such that Ibadan DisCo will have increased power supply to be able to distribute to more industrial clusters and residential customers within its area of operation.

“We came here with Ibadan Distribution Company that is in charge of most of the South West states and they carry out electricity distribution in this zone. “We are looking at working together what we call a bilateral arrangement under contract that we see us supplying the electricity to them while they distribute to industries, clusters and residential customers essentially to see how we can use this asset to the benefit of Nigerians.

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“We have a number of industries at the Shagamu inter-change, but there is no connection from this power plant to that axis, so we are looking at developing a transmission line from the power plant here to the inter-change for the companies there and it would encourage other companies to come into that industrial cluster.

“We are closing the loop between here and the Papalanto transmission sub-station and to the existing transmission line that goes from Papalanto to Ota. The lines were built by NDPHC. We also have what we call the new Abeokuta sub-station which is a 2 by 60 MVA sub-station.

We are looking at connecting this Olorunsogo plant to the sub-station at Papalanto. We are basically looking at how to put this investment by government into use for the benefit of Nigerians,” he added.

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