FG might pay N600bn as electricity subsidy

He emphasized how the Service-Based Tariff (SBT) helps to lessen tariff subsidies, but he also pointed out that tariff subsidies come with a financial cost.

The Nigerian federal government is set to allocate N600 billion for electricity subsidies in 2023, according to Engr. Sanusi Garba, the Chairman and CEO of the Nigerian Electricity Regulatory Commission (NERC). Garba revealed this information during a ministerial retreat in Abuja, focusing on the Integrated National Electricity Policy and Strategic Implementation Plan.

Despite a reduction in the government’s annual subsidy from N528 billion in 2019 to N144 billion in 2022, Garba disclosed that the increase in electricity subsidy for 2023 is necessary. He highlighted the role of the service-based tariff (SBT) in reducing tariff subsidies but noted that the financial burden of tariff subsidies from 2015 to 2022 amounted to NGN2.8 trillion.

The major challenges in the sector, according to Garba, include insufficient end-user tariffs, poor DisCo collections, and revenue shortfalls, posing threats to investments and the sector’s viability.

NERC Chairman reveals the Nigerian government’s plan to allocate N600 billion for electricity subsidy in 2023
Minister of Power emphasizes the need for restructuring TCN and transitioning to renewables, citing challenges in the sector

Minister of Power, Adebayo Adelabu, also spoke at the event, emphasizing the need to create a separate company from the Transmission Company of Nigeria (TCN) to enhance its effectiveness in transmitting power. Adelabu attributed the TCN’s inefficiency to the use of ageing and dilapidated infrastructure, proposing the restructuring of the TCN into two entities: the Independent System Operator (ISO) and the Transmission Service Provider (TSP).

Addressing the evolving landscape of state electricity markets, Adelabu stressed the importance of synchronizing the restructuring with calls for the decentralization of the national grid into regional grids interconnected by a new higher-voltage national or super-grid.

On a positive note, Adelabu mentioned that over 98 percent of electricity in the country is now generated through renewables, marking a significant increase from the 70.5 percent generated in the previous year. He highlighted the transition to clean fuels such as solar, hydro, wind, bioenergy, and others in Nigeria’s efforts to boost electricity generation capacity through renewable means.

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