Consumers of electricity who are on the lowest rung of the ladder will have their bills subsidized when the implementation of the new price regime for electricity consumption is introduced later in the year.

This was disclosed by the chairman of the Nigerian Electricity Regulatory Commission (NERC) barrister Sam Amadi, while speaking at a forum in Lagos on Saturday.

Amadi noted that the increment in price being contemplated was not to punish the common man, but to make the electricity industry attractive to private investors who the government hoped would boost productivity in the sector.

In an address entitled; “Six Disciplines for a Successful Power Sector Reform,” Barrister Amadi said the commission was aware of the anxiety and public concerns arising from the anticipation of the proposed increase.

“The anticipation of increase in electricity tariffs by the electricity regulatory commission has caused significant public concern. Proposed increase in price of any product, especially a basic product like electricity, is expected to elicit strong reaction from the public. This is more so where, like in Nigeria, the politics of pricing often outweighs the economics of pricing. We can easily gauge the intensity of response to expect when the adjusted price is announced from the public furores that greeted the slight increase last July.

“The Nigerian Electricity Regulatory Commission announced that beginning from July 1, 2011, tariff would be increased from N8.50 to N10.00K. This was based on the provisions of the 2008 Multi Year Tariff Order (MYTO). Although the increase by itself is relatively insignificant, consumers rose up in arms because the supply condition in the market remained critical and quality of service very poor.

Some stakeholders opposed the review. Their argument is that if the regulator had improved quality of service, including the supply of electricity to Nigerian businesses and homes, then a case could be made for upward review of the tariff,” he noted.

Amadi also hinted that prepaid meters were now available in large quantity for unward distribution to consumers.

Also speaking at the forum, NERC’s Commissioner, Market Competition and Rates, Mr. Eyo Ekpo, noted that for quality and regular electricity to be available, there must be massive investment in infrastructure, particularly natural gas, adding that this could not be achieved without enough funding.

“If electricity must be available, accessible and affordable to every Nigerian – and it must – then, massive natural gas and electricity infrastructure construction and upgrades must happen now, and they will cost quite a lot of money annually for a long time to come.

“To guarantee that investment, our electricity tariffs must be set right. Between 1987 and 2007Nigeria acquired under 3,500 megawatts of new capacity, about 25 per cent of which is constantly unavailable due to natural gas and transmission constraints. Since 2007, nothing, even though each year without at least 2,000 megawatts of new capacity being put into the national grid is a year of lost opportunities and irreparable damage in every sector.

“While the surprise and anger that followed the recent increase in average electricity tariffs from N8.50 to a still below cost N10.00 per kilowatt-hour is understandable, the inexorable reality is that our national foreign and domestic aspirations are unsustainable without providing all Nigerians (not merely the small minority urban elite and middle class who have private generators) with steady, quality electricity,” he said.