EXPERTS have concluded that electricity tariffs should be raised to an amount that is profitable for gas suppliers and power companies, and that government should regulate pricing to create a willing-buyer/willing-seller situation across the gas supply value chain. Doing this will encourage greater investment especially foreign ones in Nigeria’s gas sector, improve gas reserves utilisation and supply, and consequently improve electricity supply.

The experts reached this conclusion at the third Centre for Petroleum, Energy Economics and Law (CPEEL) roundtable dialogue held at the International Conference Centre, University of Ibadan, Ibadan, last Thursday.

One of the roundtable discussants, Fisoye Delano, President of Delphi Ventura Group, said: “To increase power generation and power supply in Nigeria, the fundamental thing is that the tariff has to be cost-reflective to pay for the entire chain. That is there should be sufficient value for the GenCos, DisCos, and gas suppliers.

“There may be some political and social push-back, but the marketing objectives of the reform bill should be very pragmatic to educate the consumers that it is in their own interest because the cost of electricity will be reduced by the new higher tariff that may be imposed.

“When you talk about self-generation through diesel or petrol engines, it is ultimately more expensive. But it is cheaper to allow those tariff levels to be appropriate so there will be increased generation of electricity and eventually, over time, when the collection is improved and the losses are reduced, it will ultimately be cheaper to get grid supply for the interest of growing this economy.”

Another discussant, Dada Thomas, chairman of Marginal Fields Operators Group (MFOG), said that the prevailing electricity tariff is neither cost-effective nor market-reflective. He added that the lack of sanctity of contracts issued within sector was another hindrance to profitability and further investment.