FG Subsidizing 67 Percent Cost Of Power Production, Transmission, Distribution – Adelabu
Despite the removal of subsidy for Band A electricity customers, the minister of Power, Adebayo Adelabu has said the federal government is still subsidising 67 per cent of the cost of power production, transmission, and distribution in the country.
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Recall that the federal government raised the tariff for Band A customers by 240 per cent from N66 per kilowatt hour to N225 in the bid to reduce the sector’s subsidy cost.
Speaking over the weekend, the minister pointed out that Nigeria is in a subsidy regime where the government covers 67 per cent of the cost of power production, transmission, and distribution, which consumes more than 10 percent of the National budget.
“This is a burden on the country’s meagre revenue,” he said.
Adelabu emphasized that with the removal of subsidies on petrol, the floating of the Naira, and the inflation rate in the country, the government does not want to aggravate the suffering of Nigerians. He further said that the power sector needs an overhaul, and the present administration has taken the bold step to start the journey. He pleaded for patience and understanding in addressing the root cause of the problems of the Power Sector to provide consumers with the desired service.
He emphasized the need for consumer protection and that value for money is critical for consumers, adding that the Ministry is determined to keep its promise to Nigerians on the issue of electricity.
Speaking on the recent tariff increase, the Minister said the increase is only for consumers in the Band A category, which is only 15 per cent of consumers, while other customers will continue to enjoy the government subsidy.
According to the Minister, the ministry intends to provide a cost-reflective tariff and gradually migrate other consumers to the band A grade over three years. These consumers will enjoy 20 to 24 hours of electricity per day, and that, realistically, it is cheaper at N225 per kilowatt than diesel and generating sets.
Adelabu said the sector currently needs to be more attractive to investors. “There is an infrastructure deficit, which includes the availability of gas and the generation, transmission, and distribution of power. These must be addressed for the sector to grow and benefit Nigerians”. He also mentioned that the current metering gap needs to be bridged and that all the issues stated can only be addressed by the generation of funds.
The minister said the sector had been decentralized and that consumer protection was vital. “Twenty hours must be achieved as promised, and anything else would attract consequences for the distribution company”, he said.
Adelabu also advised Nigerians to learn energy consumption management while getting value for money spent. “At the same time, the ministry, on its part, is ramping up generation, such as renewable energy and the Zungeru projects. The Ministry is also working hard to find creative ways to cut vandalism while installing new lines and injection lines and investing in advocacy to educate consumers”, he said.
