Fashola: FG Unwilling to Provide N3bn Projected Solar Power Subsidy


Chineme Okafor in Abuja
The Minister of Power, Works and Housing, Mr. Babatunde Fashola, on Thuresday  said the federal government would not be able to provide funds to subsidise solar power projects and consumption of its outputs.

Fashola who met with about 14 solar power promoters in Nigeria in a renewed effort to clear extant challenges militating against investment in and use of solar power in the country, explained that about N3 billion has been calculated as the possible monthly fund the government would have to pay if it wants to subsidise solar power consumption in the country.

The minister flatly told the solar power promoters that irrespective of government’s appreciation of their unique challenges, it was not considering paying out that huge sum monthly for consumption of power generated from their solar plants.

He rather advised them to consider securing bulk electricity consumers whom they can sell their outputs to at prices that would guarantee them their bottom lines.
He rose from the lengthy meeting at the corporate headquarters of defunct Power Holding Company of Nigeria (PHCN) to tell journalists that the government has decided to look closely into the potentials of solar power usage, hence, the meeting but that it was careful not to incur such commitment.

The minister explained that the vendor have ongoing projects in various parts of the country which are held back from achieving financial closure due to such challenges like tariff and tax rates.

He noted that the essence of the meeting was to find ways to solve some of the challenges identified by the vendor.
“Solar is one of the options for incremental power in line with our road map for the sector from incremental, to steady to uninterrupted power. So, we are working our talk and we are looking at every place we can to get energy.

“People have often said why can’t they have solar power, the reason is that solar power also comes at a cost. At today market prices in Nigeria it is a little more expensive than gas power,” he said.
According to him: “And those are the issues, how can we bring down the price because if we don’t bring down the price, it means that government will have to continue to subsidise power with the propensity for inefficiency that subsidy carry with them.

“We want to bring to market at its most competitive price and hopefully a little bit affordable to people.”
“The only problem now is the price and the liquidity issues. What we see in our books is that at this price it means that government will be paying about N3 billion every month to subsidise power and we cannot carry that kind of subsidy.
“Ultimately, the point is that the burden to government of massive subsidy of about N3 billion or more in a month is not passed on to us,” said Fashola.

Speaking further, he said: “The good thing about solar is that the price seldom never goes up, it stays fixed or comes down but the entry market price now is 17 cents per kwh and if multiplied at N200, it is about N34 which is much more expensive than the current gas and other tariff.

“So, we are trying to bring that down and the operators have a lot of enthusiasm of trying to see to see how they can review some of the prices. They are trying to see if there will be off-takers who would take at the price.
“They are also suggesting to us that as government may be we can intervene by taking off VAT, import duty charges and give them waiver on the components that they import. They are also asking of possible access to some central bank financed loans that reduce the cost of money,” he noted.