Expect Further Hike In Electricity Tariff In Nigeria

The Federal Government says there will be an increase in the electricity tariff, irrespective of which level a Nigerian falls in in the power usage category.

The disclosure comes barely two days after the Nigerian Electricity Regulatory Commission (NERC) increased the electricity tariff for customers under the Band A classification.

Speaking at a briefing in Abuja on Friday, Minister of Power, Adebayo Adelabu, disclosed that the increment would extend to other bands.

He stated that the recent increase in electricity tariffs is part of the plan to phase out electricity subsidies in the country and move to cost effective pricing.

He said the government plans to remove all subsidies in the sector to allow the thriving of investment in the power sector, adding that 67% of electricity costs in the country were being subsidised by the government.

READ ALSO: Nigerian Govt Announces Increase In Electricity Tariff

The Minister said: “This tariff review is in conformity with our policy thrust of maintaining a subsidized pricing regime in the short run or the short term with a transition plan to achieve a full cost reflective tariff for over a period of, let us say, three years. I have mentioned it in a couple of media briefings that it is because of government sensitivity to the pains of our people that we will not make us migrate fully into a cost reflective tariff or to remove subsidy 100 percent in the power sector like it was done in oil and gas sector.”

“We are not ready to aggravate the sufferings any longer which is why we said it must be a journey rather than a destination and the journey starts from now on, that we should do a gradual migration from the subsidy regime to a full cost reflective regime and we must start with some customers.

“This is more like a pilot for us at the Ministry of Power and our agencies. It is like a proof of concept that those that have the infrastructure sufficient enough to deliver stable power of enjoying 20 hours of light to be the ones to get tariff add.”

The Minister added that the N225 kilowatt per hour Band A customers are charged as little in relative to the N500 they pay for alternative energy like diesel and others.

While explaining that Nigeria is experiencing a subsidy pricing regime where the government provides a large portion of the generation, transmission and distribution cost, he said the government was formerly subsidising 67 percent of the cost of electricity.

“The government would have paid N2.9tr for 2024. This is more than 10 percent of the national budget. It will be insensitive on our part to compel the government to pay such subsidy when we have other competing issues the government needs to fund under pau its of funds we have.”

In light of the legitimate concerns raised by Nigerians regarding the impact of electricity tariff hikes, the government must take proactive measures to mitigate the adverse effects on vulnerable segments of society. This may include implementing targeted social safety nets to cushion the impact of tariff increases on low-income households, such as targeted subsidies or direct cash transfers.

The government should prioritize efforts to improve the efficiency and transparency of the electricity sector, addressing underlying issues such as revenue collection, metering accuracy, and distribution losses. By enhancing accountability and governance within the power sector, the government can build trust and credibility with consumers while laying the foundation for sustainable long-term reforms.

The Federal Government’s announcement of further electricity tariff hikes underscores the complex challenges facing Nigeria’s power sector and the difficult trade-offs involved in pursuing reforms. While the government’s objectives of phasing out subsidies and promoting a more financially sustainable electricity market are commendable, it is imperative that the concerns and welfare of ordinary Nigerians are not overlooked in the process. By adopting a holistic approach that balances economic imperatives with social considerations, the government can navigate the path towards a more inclusive and resilient energy sector that serves the needs of all Nigerians.

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