News Roundup
FG budgets N177b to cushion impact on Nigerians
May 2, 2008, 11:43
| | The Yar’Adua Administration today took a major step towards attracting required investment for the rapid development of Nigeria’s power supply sector with the approval by the Federal Executive Council of the implementation of a new Multi-Year Tariff Order (MYTO) with effect from July 1, 2008.
A statement signed by the Special Adviser to the President on Communications, Mr Olusegun Adeniyi on Wednesday April 30 explained that the introduction of the MYTO is expected to boost the confidence of lenders and investors alike in the profitability of investments in Nigeria’s power sector as it provides for reasonable returns on capital investment, and the correct pricing of power which will, in concert with other measures being adopted by the Yar’Adua Administration, facilitate an orderly transition to a much more efficient and reliable market-oriented power-supply system.
The Federal Executive Council meeting chaired by President Yar’Adua further approved that consumers will not immediately have to pay more for electricity under the new tariff order as the Federal Government will establish an MYTO Support Fund to cover the power sector’s revenue shortfalls during the three-year transition period that will begin on July 1.
The Council consequently approved the sum of N64.84 Billion to fully subsidize electricity consumption by Nigerians in the 2008/2009 period. It is expected that the Federal Government will provide a further N77.41 Billion in 2009/2010 and N35.80 Billion in 2010/2011 making a total of N177.95 Billion in electricity subsidy over the three year transition period.
The MYTO developed by the Nigerian Electricity Regulatory Commission (NERC) is predicated on the quantification of the total revenue requirements of all power industry participants.
In approving its gradual implementation, the Federal Government recognized that correct pricing for the commercial viability of Nigeria’s power industry was of critical importance to the urgent resolution of the twin problems of inadequate and unreliable electricity supply.
It is expected that with the full implementation of the MYTO, the current situation in which the power industry is unable to generate enough revenue to cover its operating costs, undertake regular maintenance and make new investments, will become a thing of the past.
The President had at his meeting with State Governors yesterday tabled and received the governors’ consent for a new funding regime that will provide for the massive injection of funds for the rapid expansion of Nigeria’s power generation, transmission and distribution infrastructure.
President Yar’adua remains fully and constantly engaged with the resolution of Nigeria’s power supply problems. He wishes to reassure all Nigerians that his Administration is doing everything possible to ensure that stable power is achieved within the tenure of his Administration.
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