FG now pays N1 trillion as electricity subsidy — Minister

Minister of Power, Adebayo Adelabu, has said that the introduction of band A with a higher tariff has reduced electricity subsidy to N1 trillion from about N3trillion.

The minister said this at the public hearing on electricity tariffs in Abuja on Tuesday.

The hearing was organised by the House of Representatives Joint Committee on Power, Commerce, National Planning, and Delegated Legislation.

Mr Adelabu said that without an increase in electricity tariffs the expected subsidy would have been close to N3 trillion.

He said the Federal Government could not afford to pay N3 trillion in subsidies

The minister said that instead of piling up debt for the government, the ministry came up with the model for customers to pay for subsidies on band A.

According to him, this will compensate for the fuel and diesel that consumers are using.

He said that what consumers spend now is cheaper compared to fuel and diesel, even with the increase in electricity tariff.

“We are still about the cheapest, even in sub-Saharan, in spite of the tariff. Our neighboring countries pay higher. So the price isn’t comparable.

“Band A is cheaper compared to other sources of generating power. It is almost 50 per cent cheaper to connect to band A of the national grid than to run on fuel and diesel.

“So when we complain about the higher tariff, it is cheaper for any business to pay for a grid connection than to individually generate power,” he said.

He said President Bola Tinubu led administration meant well for Nigerians, adding that he would not aggravate an already bad situation in the country.

“We are out to make things better for Nigeria and to create industrial development through our local manufacturing, and energy is needed to do this,” he said.

The minister said the increase in tariff was not targeted at making life difficult for Nigerians but to make life affordable for the people.

Benjamin Kalu, Deputy Speaker of the House of Representatives, said that the decision by the Nigeria Electricity Regulatory Commission, NERC, to increase electricity tariffs had sparked widespread discontent.

He said the justification provided for this tariff hike as outlined by NERC, was to address the industry’s mounting debt and ensure continued functioning of the power sector.

Mr Kalu said it was evident that the move had not been well-received by the citizenry, adding that the fears expressed by many were valid.

He added that such a sharp increase in electricity tariffs would only exacerbate the economic hardships already faced by our people.

“There are genuine concerns that higher utility bills resulting from this tariff hike can have ripple effects on operational costs for businesses, potentially leading to increased prices of goods and services,“ he said.

Mr Kalu said lawmakers are committed to work closely with the executive to transform the power sector into a model of efficiency, and sustainability as outlined in the legislative agenda.

“We are dedicated to providing legislative support to efforts of the Tinubu’s administration in reforming the power sector by addressing all legal and legislative impediments,” he said.