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Despite the discontinuation of subsidies for Band A electricity customers, the Minister of Power, Adebayo Adelabu, has stated that the federal government continues to subsidize 67 percent of the expenses related to power production, transmission, and distribution in the country.
It is worth recalling that the federal government increased the tariff for Band A customers by 240 percent, from N66 per kilowatt-hour to N225, to reduce the sector’s subsidy costs.
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Speaking over the weekend, the minister highlighted that Nigeria operates under a subsidy regime where the government covers 67 percent of the costs associated with power production, transmission, and distribution, a figure that consumes more than 10 percent of the national budget.
“This poses a burden on the country’s limited revenue,” he remarked.
Adelabu stressed that with the removal of subsidies on petrol, the floatation of the Naira, and the country’s inflation rate, the government is mindful not to exacerbate the plight of Nigerians.
He further noted that the power sector requires a comprehensive overhaul, and the current administration has taken the courageous step to commence this journey. He appealed for patience and understanding in addressing the underlying issues plaguing the Power Sector to ensure consumers receive the desired service.
He underscored the importance of consumer protection and emphasized that value for money is crucial for consumers. Additionally, he assured that the Ministry is committed to fulfilling its promise to Nigerians regarding electricity issues.
Regarding the recent tariff hike, the Minister clarified that the increase applies solely to consumers in the Band A category, which constitutes only 15 percent of consumers, while other customers will continue to benefit from government subsidies.
The Ministry aims to implement a cost-reflective tariff and gradually transition other consumers to the Band A category over three years. These consumers will enjoy 20 to 24 hours of electricity per day, and realistically, the tariff of N225 per kilowatt is more economical than diesel and generators.
Adelabu emphasized the need to make the sector more appealing to investors, addressing infrastructure deficits such as gas availability and power generation, transmission, and distribution. He also highlighted the urgency of bridging the current metering gap and emphasized that these issues can only be tackled by generating funds.
The Minister mentioned that the sector has been decentralized, with a strong focus on consumer protection. He warned that failure to achieve the promised 20 hours of electricity would have consequences for distribution companies.
Adelabu advised Nigerians to adopt energy consumption management practices while ensuring they receive value for their money. Meanwhile, the Ministry is actively boosting generation, including through renewable energy and projects like Zungeru. Efforts are also underway to combat vandalism, install new lines and injection lines, and invest in consumer education.
