Electricity Subsidy Reduces to N1trn After Tariff Increment—Minister

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According to Minister of Power Adebayo Adelabu, the introduction of band A with a higher tariff has resulted in a reduction of the electricity subsidy from around N3 trillion to N1 trillion. This was said by the minister on Tuesday during the open hearing on energy rates in Abuja.

The House of Representatives Joint Committee on Power, Commerce, National Planning, and Delegated Legislation organized the hearing. Adelabu stated that the anticipated subsidy would have been about N3 trillion had energy rates not increased.

He claimed that N3 trillion in subsidies would be beyond the means of the federal government. The minister stated that the ministry developed the plan for customers to pay for band A subsidies rather than accruing debt for the government.

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`s 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.

Rep. 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. 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.

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.

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