Electricity generation companies have called on the Nigerian Electricity Regulatory Commission to urgently review electricity tariffs following the Federal Government’s recent increase in the domestic base price of gas, warning that delays could worsen liquidity challenges and distortions across the power sector.
The Chief Executive Officer of the Association of Power Generation Companies, Joy Ogaji, said operators were less concerned about the increase in gas prices itself, but more worried about regulatory delays in adjusting tariffs to accommodate the new cost reality.
Ogaji, on Monday, described gas as a “pass-through cost” that must be captured transparently in tariff computations.
She said, “Gas price, whether it is raised to $10, is not really our problem. Gas is a feedstock and a pass-through cost. So, if the regulator in the power sector is comfortable with the increase, it is not a problem for us because whatever we are charged, we pass it down to consumers.
“All we want is for NERC to acknowledge the new base price and input it into tariff calculations. There is now a clear difference between what we used to pay and the new price, and that gap must be recognised.”
Despite the push for tariff adjustment, Ogaji stressed that the core challenge in the sector remained poor payment discipline rather than pricing. “For us, whether the price is high or low is not the issue. What matters is whether payments are made for what is supplied.
Even when the price was low, what percentage of invoices were settled? If you increase the price and payments are still not made, what difference does it make?” she queried.
She further called for the establishment of what she described as “bankable demand” in the electricity market, arguing that the absence of a clear and reliable payment structure continues to deter investment. “We need to define bankable demand in the market. Until we do that, we cannot determine whether investor confidence will improve or whether new investors can come in.
“Nigeria has over 200 million people, but how many are actually paying for electricity? And even among those who are paying, do we have transparency to verify those payments? There is no transparency anywhere,” she added.
Ogaji warned that without structural reforms, including stronger political will and enforcement, the sector risks stagnation. “If we are not careful and do not change the dynamics, we will still be discussing the same issues in two years. The President needs to take decisive action, possibly declare a state of emergency in the sector and give clear marching orders on what must be achieved,” she said.
Also speaking, the Executive Director of PowerUp Nigeria, Adetayo Adegbenle, said the increase in gas prices would inevitably translate to higher electricity tariffs and rising subsidy obligations. “Since the price of gas, which is the major fuel for Gencos, has increased, it is expected that electricity tariffs will also increase,” he said.
Adegbenle added that regardless of whether tariffs are immediately adjusted, the financial implications would still manifest in higher invoices from generation companies. “Whether electricity tariffs are reviewed or not, it is bound to affect invoices from Gencos. What we need to understand, however, is what the government’s plan is to absorb the shock of these expected changes. The Punch
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