Nigeria’s Minister of Power, Chief Adebayo Adelabu, on Thursday said over N350 billion in electricity subsidy debts were carried over from 2023 into 2024 by the federal government, thereby overburdening its finances.
Speaking in an interview on Thursday night, the minister noted that government was mindful of the hardship Nigerians are currently facing, stressing that it was the reason the government ensured that only 15 per cent of power consumers in Nigeria were affected by the latest tariff hike.
However, he stated that despite that, the federal government was still paying subsidy on electricity for persons outside Band A supply level, which would gulp about N1.8 trillion this year.
He also spoke on the legality of the recent tariff adjustment, insisting that the review of tariff is legal, once it is within the exclusive responsibility of the Nigerian Electricity Regulatory Commission (NERC).
“The Act actually provides for review twice in a year, every six months,” he added.
The minister listed the rising dollar value, increasing gas prices, the cost of power generation, transmission and distribution infrastructure in recent times as some of the reasons that prompted the inevitable tariff increase.
“Last year, it (subsidy) was about N720 billion which was not fully funded. We had about N305 billion carried into this year. If we retain tariff at the current level, the Nigerian government will be needing about N2.9 trillion to subsidise electricity.
“But with the increase in tariff for Band A customers, we are going to have a reduction of about N1.1 trillion. So, we are looking at about N1.7 trillion to N1.8 trillion in subsidy,” Adelabu said.
According to him, overall, government was paying an average of N67 per cent per kilowatt hour of electricity in subsidy while it is was paying about 90 per cent of generation cost incurred by the over 20 power plants nationwide before the recent rate hike.
“If we have been paying the tariff at the same level in the last two years, it logically means that someone has been paying the burden of all these increases.
“As it is today, looking at a total production, transmission and distribution cost, the Nigerian government is bearing 67 per cent percent of that cost before the increase in tariff for Band A customers.
“But when you look at generation cost, the Nigerian government is paying 90 per cent but in terms of total subsidy, it is about 67 per cent of subsidy on the tariff.
“The fact that the tariff for Band A, which is 15 per cent of the total consumers will increase by over 200 per cent, does not necessarily translate into 200 per cent increase in their electricity bill if power is properly managed in terms of consumption,” he stated.
Adelabu pointed out that while power to premium customers will be ramped up, other bands will not be short-changed by distribution companies, explaining that by cutting down the inefficiencies of some operators in the sector, plus the ongoing gains by the naira against the dollar in the last few weeks, tariff paid by Nigerians should moderate.
“The tariff is flexible and I can tell you that even if naira gains more and the exchange rate comes down below N1,000, it must positively affect the tariff and the tariff even for the Band A will come to down below the N225 kilowatt per hour that we are currently charging,” he stressed.
Adelabu also apologised to Nigerians for saying that they usually leave their freezers switched on all the time because they pay low electricity tariff.
“Anything we have said that is considered offensive, we are sorry about that,” Adelabu said.
The minister had said that Nigerians lack the culture of electricity consumption management because of “cheap” power supply partly offered by the government.
But while expressing regret over his comment, he added: “It was never intended to insult the sensibilities of Nigerians in any way”.
“It was an innocent advice with regards to energy consumption management which we believe will go a long way in reducing people’s energy bills. And that advice was directed at those that we believe that because of the recent increase in tariff will start enjoying 20 hours of power per day.”
Emmanuel Addeh
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