Nigeria’s Minister of Power, Adebayo Adelabu, has continued his campaign for the removal of subsidy on electricity, declaring that the federal government can no longer continue to subsidise the power sector.
Adelabu told journalists in Abuja on Wednesday while expressing concerns over the nationwide poor electricity supply situation in the country, regretting the numerous issues plaguing the sector including outstanding subsidy debts.
The Minister said the nation must begin to move towards a cost-effective tariff model, as the country is currently indebted to the tune of 1.3 trillion naira to generating companies (GenCos) and 1.3 billion dollars owed gas companies.
He said that over N2 trillion is needed for subsidy, butonly N450 billion was budgeted for this year.
Adelabu noted that State governments will now be allowed to generate power independently to supply power to their States.
This is coming days after the International Monetary Fund (IMF) advised President Bola Ahmed Tinubu to completely phase out electricity subsidy in the country, despite the hardship Nigerians are facing since the removal of fuel subsidy in May 2023.
According to its published ‘Post Financing Assessment (PFA)’ report, the IMF said the federal government had overwhelmed itself, thus recommending that the total removal of both fuel and electricity subsidies must be implemented.
The Bretton Woods Institution made this recommendation as the mechanism for Nigeria to restore macroeconomic stability, coming as corroboration to what the government had said late last year that electricity subsidy between January and September 2023 had gulped N375.8 billion, as power consumers paid a total of N782.6bn for the commodity during the same period.
On Wednesday, January 31, 2024, the Minister of Power came up with the shocking proposition of migration to “full cost-reflective tariff regime” of zero subsidy for electricity.
For the minister, the sure way to escape the energy crisis bedeviling Nigeria and Nigerians is to stop electricity tariffs’ subsidy, just like the fuel subsidy.
Adelabu noted that Nigerians need to have a conversation on whether to pay for the real price of electricity, and that even within the West African sub-region, Nigerians pay the lowest electricity tariff. He added that Ghana, Ivory Coast and Niger Republic pay more than double the tariffs Nigerians pay.
The minister, who spoke after visiting the 750 megawatts (mw) Olorunsogo Power Generating Plant in Ogun State and the 500mw Omotosho Generating Plant in Ondo State, said: “If our government is not ready to fund subsidies, it is actually better for us to migrate to a fully-cost-reflective tariff, because liquidity is a major issue in the sector, which has led to a huge debt being owed power generating companies. And once they are owed, they are also unable to pay the gas suppliers. When the gas suppliers are not paid, they will be unwilling to supply regular gas to them.”
