New Telegraph

We Pay N2.9trn On Power Subsidy – FG

The Federal Government said it spends N2.9 trillion or about 67 per cent to subsidise the cost of electricity in the country.

The Minister of Power, Adebayo Adelabu, at a ministerial press briefing organised by the Ministry of Information and National Orientation, explained that the power sector is facing a lot of challenges, which need to be urgently addressed.

Adelabu stated the power sector is not attractive to investors, because of liquidity problems and infrastructure deficit.

“We have a 55 per cent meter gap. A lot of consumers are not metered. The cables are weak, so also the transformer and it requires money to replace. There is vandalisation of the pipelines.

“The banks are not willing to help because the sector is not attractive. So we need to make it attractive so that investors can come in.

“There is a structural issue also. Before now, the power sector is on the exclusive list, only the Federal Government can to invest in the power sector.

“But now with the signing of the Power Sector Act, the government has decentralised sector,” he said.

The minister stated that the recent tariff increase, which he explained, involved about 1.5 out of 12 million consumers, is to ensure efficiency and operator independence.

“This government is sensitive to the suffering of Nigerians, that is why the government doesn’t want to remove subsidy completely; government is not ready to add to the suffering of the people,” he said.

Adebayo stated that the 15 per cent of consumers affected by the tariff increase have established capacity and willingness to pay, adding that the N225 increase is cheaper than running alternative energy.

“The average cost is alternative to diesel or fuel because you have to purchase the generator, fuel it and service it from time to time,” he added.

The minister said those in the new tariff category will enjoy power supply for 20 hours, and threatened sanctions if distribution companies do not meet the target.

He disclosed that 481 feeders are classified as Batch A.

Vice Chairman, of Nigeria Electricity Regulatory Commission (NERC) Musiliu Oseni disclosed that in January 2024, the Federal Government paid N240 billion to Distribution Companies (DISCOs), of which they were paid only 10 percent.

Oseni added that “90 per cent of the generation was being borne by the government. With the review about, 50 percent of electricity cost will still be borne by the government. The subsidy removal is pro-poor.”

Minister of Information and National Orientation Alhaji Mohammed Idris, said the power sector policy unveiled by the Federal Government, is aims at boosting sufficiency in power supply for all Nigerians.

“The most important aspect of the policy is that the Tinubu administration is sustaining electricity subsidy to 85 per cent of Nigerian consumers, which re-justifies its credential as a pro-people democratic government while effecting electricity tariff increment to only 15 per cent of the electricity consumer population.

“Misconceptions and concerns around the tariff review are understandable. However, let me reassure every Nigerian that this review is a strategic step toward a more sustainable, efficient, and equitable electricity sector.

“It lays the groundwork for significant improvements in service delivery, infrastructure development, and economic prosperity.

“Our focus must therefore remain steadfast on ensuring that the electricity sector’s transformation benefits all Nigerians, supports our industries, and propels our nation towards its bright future,” he said.

According to him, the Electricity Act (Amendment) Bill, 2024 signed into law by President Tinubu, is to further strengthen the governance structure in the power sector and mandates the GENCOs to set aside five per cent of their actual annual operating expenditure from the preceding year for the development of the host communities.

The minister further noted that the Act also removed electricity from the exclusive list to empower the state government to generate and distribute electricity to residents.

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