The Minister of Power, Adebayo Adelabu, has said that the Federal government is still subsidizing electricity despite the recent hike in tariff paid by Band A customers, which he said constitute about 1.5 million of the total 12 million consumers in the sector.
He, however, failed to disclose figures relating to the subsidy.
The minister, who was a guest on Channels Television’s Politics Today programme on Thursday, said the government has about N1.8trn to pay in electricity subsidy for 2024.
Adelabu insisted that the Electricity Act, 2023 made provisions for the review of tariff twice a year.
Contrary to claim by human rights lawyer Femi Falana that the increase in tariff paid by Band A consumers is illegal, Adelabu insisted: “Review of tariff is actually 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.”
On claims in some quarters that the Federal government had removed subsidy on electricity in 2022, Adelabu cited rising dollar, soaring gas price, the cost of power plant, transmission and distribution infrastructure, amongst others in the last two years.
“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,” he stated.
“As it is today, looking at a total production, transmission and distribution cost, the Nigerian Government is bearing 67% 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% but in terms of total subsidy, it is about 67% of subsidy on the tariff.
“Last year, it was about N720bn which was not fully funded, we have about N305bn carried into this year. If we retain tariff at the current level, the Nigerian Government will be needing about N2.9trn to subsidise electricity but with the increase for Band A customers, we are going to have a reduction of about N1.1trn. So, we are looking at about N1.8trn in subsidy,” he further explained.
On April 3, 2024, NERC raised electricity tariff for customers enjoying 20 hours power supply daily. Customers in this category are said to be under the Band A classification. The increase will see the customers paying N225 kilowatt per hour from the current N66, a development that has been heavily criticised by many Nigerians, considering the immediacy of the tariff hike and the current hardship in the land.
However, Adelabu said, “The fact that the tariff for Band A, which is 15% of the total consumers will increase by over 200%, does not necessarily translate into 200% increase in their electricity bill if power is properly managed in terms of consumption.”
The minister assured Band A customers of value for their money. He also assured Nigerians that consumers on other bands won’t be shortchanged by distribution companies as the regulators won’t hesitate to wield their big stick on any of such discos.
He also said the government has shifted its attention on discos inefficiently ran and won’t hold back in taking the appropriate steps in the interest of consumers.