(3 minutes read)
· The Nigerian government’s financial support to the power sector, which works out to N2.3 trillion in the past few years has raised concerns
· People are debating how long the government could continue with the excessive subsidies being extended to the sector, which can impair the macroeconomic stability by keeping fiscal deficit exceedingly high
· The government is paying about N50 billion monthly as subsidy
· the Federal Government has rolled out a plan to provide six million electricity meters to Nigerians although only a million have been given so far
The Nigerian government’s financial support to the power sector, which works out to N2.3 trillion in the past few years has raised concerns. People are debating how long the government could continue with the excessive subsidies being extended to the sector, which can impair the macroeconomic stability by keeping fiscal deficit exceedingly high.
The government is paying about N50 billion monthly as subsidy. In the meantime, the Federal Government has rolled out a plan to provide six million electricity meters to Nigerians although only a million have been given so far. The remaining supply of meters is being awaited. The rationale of giving free meters to the consumers is to avoid rampant power theft, which leads to heavy losses to the operators. Though the government has unbundled the power system and privatized the distribution, not many private entities are entering the fray due to lack of support system for preventing power pilferages. Privatization was carried out in the West African country seven years ago.
In a recent adjustment to the tariff, the government had reduced the subsidy burden by half. That has brought the monthly subsidy expense to N25 billion and N 300 billion for the year. Yet, the quantum of subsidy works out almost two times higher than the allocation to the Ministry of power in 2020 as well as 2021.
