Home » Energy » Ajaokuta Gulped over $10bn – Fayemi * Electricity Tariff Has Come To Stay – Fashola

Ajaokuta Gulped over $10bn – Fayemi * Electricity Tariff Has Come To Stay – Fashola

Teddy Nwanunobi, Abuja

Minister of Mines and Steel Development, Dr. Kayode Fayemi, on Tuesday revealed that the Federal Government spent over $10 billion on the Ajaokuta Steel Company since it was established 45 years ago.

Meanwhile, the Minister of Power, Works and Housing, Mr. Babatunde Raji Fashola, maintained that the new electricity tariff has come to stay, as the National Assembly does not have the power to stop the Nigerian Electricity Regulatory Commission (NERC) from reviewing electricity tariffs in the country.

Fayemi, who made the revelation at the 2016 Budget defence before the joint Senate Committee on Power and Solid Minerals and Steel Development, regretted that the giant project had not been able to provide the technological and other needs of the country, in spite of the huge funds that had gone into the establishment.

He pointed out that there was need for the present government to sit back and take a critical study of the Ajaokuta Steel industry, with a view to proffering solution to the seeming intractable problem of the plant, so as to make it viable and productive for the socio-economic needs of the country.

Fayemi lamented that the present condition of the plant was critical in such a way that any money invested into it in an attempt to revive it would amount to throwing a huge treasure into a bottomless pit.

Describing the white elephant project as a national embarrassment, Fayemi stressed that the government would do anything within its powers to rejuvenate the comatose steel company.

“There is no doubt that Ajaokuta Steel plant is a monumental national embarrassment. From the record available to us, federal government has invested more than ten billion US dollars since it was established in 1971. But unfortunately, it has not yielded the desired result towards the development of the economy,” he said.

On the clamour to diversify the economy through the development of the solid minerals and steel sectors, the Minister said that this government would not pump in huge funds into the two sectors until it had deeply understudied them so that the nation’s scarce resources would not be wasted as done in the past.

He said that the N9 billion earmarked for solid minerals was deliberate, in line with the determination of government to fully study the sector within one year before investing heavily to a point where it could actually be used to diversify the economy.

In a different development, Fashola noted that members of the National Assembly lacked the power to stop the leadership of the Nigerian Electricity Regulatory Commission (NERC) from reviewing electricity tariffs in the country.

Fashola, who addressed National Assembly correspondents after his budget defence, said that NERC was constitutionally empowered to set new electricity tariffs for consumers in the country.

He added that the relevant laws backing NERC were passed by the National Assembly.

“The law passed by the National Assembly clearly gives NERC the responsibility and power to give a tariff that enables them to recover their investment and returns on investment. So, nothing unlawful or illegal has happened. So, I think it was the way it was managed before we came and the review every two years,” he said.

The two chambers of the National Assembly had recently warned NERC to halt plans to implement the new electricity tariff regime in the country, following a motion passed by the House of Representatives in mid December, 2015.

Speaking on the need for federal government’s partnership with the private sector in order to generate more electricity, Fashola said:

“People have been hearing for the past 20 years that power projects are over 990 per cent complete. It is absolute nonsense. As far as I am concerned, the ultimate thing is to get into work.

“One percent or 99 percent, we need to get it to work and the best way to get it to work in the interest of Nigerians is to enter into any form of partnership and we will look into that.

“It is not about what I think and I said this much before. Whether we have electricity or not, is not about what all of us agree we must do. Electricity is a product. It is made from raw materials. Some of the raw materials are gas, some of the raw materials are power plants and they are also related.

“So, the issue of tariff is the single issue of price. When the raw materials go up, the price cannot stay the same. You may ask why can’t we have more power before the price goes up?

“I am also a consumer, but we see that investments in power are not where they should be and part of the reason why government opted for privatization was to get more private capital. If the recovery price and the income and profit do not make economic sense to the investor, would you do that business, if you are the one?

‎”So, it is not what I want. It is what I think will solve the problem, everybody is owing everybody in the power equation and they are also owing banks.

‎”There are a lot of investors who want to pay a little more than the open market tariff. If we want them to come into the industry, we have to allow the new tariff order which allows for embedded order.

“There are a lot of people producing excess power. They want to put it on the grid, but the price must be right. In the process of privatisation, government was perhaps unwilling to confront Nigerians with the real market price so they were reviewing the price every two years. That gave the impression that price is reviewed every two years, but that should not have been. Government should have told us what the price was.

He pointed out that the current increment in electricity tariff was proposed to be for a period of ten years, saying that the regulatory agency would no longer change tariff in short terms.

“What we have now is a 10 year tariff. So it is not going to be changing every two years. There are indices that will affect the need to change either up or down.”

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