75% of Customers Will Keep Receiving Electricity Subsidies, Says Federal Government

According to the Federal Government, 75% of the nation’s electricity users would continue to get cost assistance for their electricity supply.

The assurance came in response to the public uproar caused by a recent 300 percent increase in Band A customers’ electricity costs.

At the ministerial press briefing hosted by the Ministry of Information to highlight President Bola Tinubu’s Renewed Hope Agenda for the power sector, Minister of Power Adebayo Adelabu made this statement.

According to Adelabu, people presently impacted by the Band A pricing rise will not only have access to power for 20 to 24 hours per day, but they will also be able to afford the higher tariff after an analysis of their financial situation.

He emphasized that Band A customers had previously benefited from 70% of the government’s approximately N1.4 trillion electricity supply subsidy.

The minister pointed out that President Tinubu needed to ensure equity by approving that the 15% of electricity consumers who enjoy a near monopoly in power supply pay a commensurate tariff instead of receiving an excessively generous government subsidy that benefits 75% of Nigerians. President Tinubu wants to improve the country’s power supply and encourage investment that will boost the country’s economy.

“I appeal to Nigerians to display some level of understanding with policies of this government. The President has vowed to use the power sector to drive the economy, even though it may appear to be tough in the beginning.

“We know the inflation rate is there, devaluation is there and the devaluation of the naira is also there, and government is aware of all these but the removal of subsidy is necessary pains that people will face to come out of those hardships.

“Reforms come with necessary pains but joy comes after the fixing have been achieved,” Adelabu said.

He emphasized that the Nigerian government was subsidizing 67% of the cost of producing, transferring, and distributing electricity, or more than N3 trillion, or 10% of total government revenue.

“I assure you that aside Band A customers who are just about 1.5 million, the remaining 10 million customers will continue to enjoy government subsidy of about 70 per cent.

“We have also established that these 15 per cent customers are willing to pay for the 20 to 24 hours of electricity supply they get.

“The average cost of generating power per day of using generator is not less than N500 per hour. So, if we are putting the cost of electricity at N235, per hour, it is still less than 50 per cent of self generation obtainable with Band A customers”.

In his list of issues facing the industry, he mentioned weak injection substations, outdated transformers, vandalized gas pipelines, gas supply shortages, operational costs, and a roughly 15 million metering shortfall.

“Only 481 feeders have been identified and classified as able to feed uninterrupted power to the consumers,” Adelabu said.

He added that “in January this year, generation invoice was N240 billion, but the GenCos were asked to pay only N24 billion, which is only 10 per cent of the bill.”

The briefing, according to Minister of Information and National Orientation Muhammad Idris, was designed to be easily accessible for public accountability. He emphasized that this was a component of President Tinubu’s strategy to ensure that the public was properly informed.

The Minister stated that he was joined by the Minister of Power, Mrs. Olu Verheijen, the President’s Special Advisor on Energy, Dr. Musiliu Oseni, Vice-Chairman of the Nigerian Electricity Regulatory Commission (NERC), other NERC Commissioners, and other stakeholders in reiterating the government’s commitment to openness in public communication as a purposeful policy to foster public trust.

Although misunderstandings and worries about the tariff review are reasonable, Idris emphasized that the study was a calculated move in the direction of a more equal, efficient, and sustainable electricity market.