Tariff Hike Essential for Rural Electrification, Says Minister Adelabu

Minister of Power, Adebayo Adelabu, has defended the recent electricity tariff hike as crucial for providing power to underserved rural areas. Speaking on Tuesday at the Alliance for Rural Electrification Energy Access Forum in Lagos, Adelabu stressed that the increase is necessary to attract investment in mini-grids for rural electrification.

Adelabu’s comments come amidst threats from the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) to initiate a nationwide strike if the Federal Government does not revert the Band A tariff from N206.80 per kilowatt-hour to N68/kWh. Represented by his Technical Advisor, Adedayo Awoniyi, Adelabu explained that the tariff hike would stimulate investments by ensuring investors receive returns on their investments.

The minister highlighted that without guaranteed returns, the power sector would struggle to attract necessary funding. “An increase in the tariff for Band A, though sometimes controversial, will actually drive investments in distributed renewable energy in rural areas. This is the only way private investors will commit funds to such projects,” Adelabu stated.

Adelabu emphasized the need for significant investment in transmission infrastructure to deliver power from generation points to load centers. “We have to invest significantly in transmission to ensure we can deliver power. Without this, there will be no market,” he added.

Labor Unions’ Protests

Following the subsidy removal in Band A areas, organized labor protested by picketing the offices of the Nigerian Electricity Regulatory Commission and various distribution companies on May 13. Adelabu urged the unions to be patient, assuring them that the tariff increase would revitalize the power sector.

Deadline for Reversal

On Monday, organized labor gave the Federal Government until May 31 to reverse the tariff increase. In a joint National Executive Council meeting, the unions condemned the hike, calling it unjust and burdensome. They demanded an immediate reversal to alleviate the economic hardships faced by workers and citizens.

Labor’s Stance

“The NEC vehemently condemns the unilateral increase in electricity tariffs, taken without considering the economic hardships faced by the masses. The NEC reaffirms its demand for an immediate reversal of the tariff hike and the categorization into bands,” the unions stated. They have given the National Electricity Regulatory Commission and the Federal Government until the end of May 2024 to meet these demands.

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