Just days after the Nigerian Electricity Regulation Commission, NERC, increased the electricity tariff by 300%, the Federal government has warned Nigerians to expect more increases as it’s gradually phasing out of cost reflective tariff.
This was made known by the Minister of Power, Adebayo Adelabu at a press briefing in Abuja on Friday stating that the increase was a measure to phase out of electricity subsidy and allow thriving investment in the power sector.
“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.”
Speaking clearly that President Bola Tinubu’s administration understands the plight of Nigerians hence its resolve to gradually phase out the cost-reflective tariff.
“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 government was subsidizing 67% of the cost of electricity and that N225 kilowatt per hour Band A customers are charged as little relative to the N500 they pay for alternative energy like diesel and others.
“The government would have paid N2.9tr for 2024. This is more than 10 per cent of the national budget. It will be insensitive on our part to compel the government to pay such a subsidy when we have other competing issues the government needs to fund.”
Meanwhile, the NERC earlier today fined the Abuja Electricity Distribution Commission, AEDC, N200 million for violation and failure to abide by the customer Band classification charged to Band A customers and demanded a reimbursement to all Band B, C, D and E customers.
