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Despite the public outcry trailing the recent 230.8 per cent rise in electricity tariff for premium power consumers nationwide, the federal government on Friday hinted that it plans to extend a similar measure to every Nigerian who has access to on-grid electricity.
The government said it would convert the entire power sector into a single band from the current six, with cost-reflective prices being fully implemented in the next three years. Speaking during a weekly briefing organised by the Ministry of Information in Abuja, the Minister of Power, Chief Adebayo Adelabu, said the recent development was the first step in the government’s plan to completely remove the subsidies.
A separate document by the Nigerian Electricity Regulatory Commission (NERC), stressed that with the increase in tariffs for Band A customers from N68 to N225, it has succeeded in saving about N1.4 trillion from what it stated was the projected N3.2 trillion subsidy for 2024. At the current price of N225, it argued that premium customers would be paying less than half of what they would otherwise spend if they deployed other alternatives like diesel-powered generators.
But Adelabu maintained that it no longer makes sense for the government to continue paying close to 70 per cent of electricity subsidy for Nigerians, explaining that to ensure the current economic downturn does not harshly impact the lower rung of the society, the government would embark on the gradual phase-out of underpayments for bands B-E and then lifeline.
The federal government had spent about N2.9 trillion on electricity subsidies. The government was still subsidising 85 per cent of the electricity supply in the country despite an increase in tariff for Band A customers. The government remains pro-poor in its power policy because it is subsidising nothing less than 67 per cent of the cost of producing, transmitting, and distributing electricity in Nigeria. He said the government is not ready to aggravate the sufferings by refusing to adopt a 100 per cent withdrawal of subsidy on electricity
The tariff review conforms with the policy thrust of maintaining a subsidised pricing regime in the short-run or the short-term with a transition plan to achieve a full cost-reflective tariff for, let us say three years. This is more like a pilot (scheme) for the Ministry of Power and the agencies. It is like a proof of concept that those that have the infrastructure sufficient enough to deliver stable power, those enjoying 20 hours of light should be the ones to get tariff added.
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With a little above 12 million registered electricity customers nationwide, the recent increase would only affect about 1.5 million customers. The remaining 10.5 million customers, he said, would continue to enjoy government subsidies at about almost 70 percent, until it is gradually phased out.
