Adedapo Adesanya
By Adedapo Adesanya
The Minister of Power, Mr Adebayo Adelabu, has disclosed that the federal government owes about N300 billion for electricity subsidy while also pointing to the fact that the country needs about N2.8 trillion to subsidise electricity and avoid increment in electricity tariff for the rest of the year.
The Minister stated this on Monday when he appeared before the Senate Committee on Power to discuss increment in electricity tariff.
“There has not been funding for this subsidy and this has culminated into each debt yearly now for the operators in the industry, especially the generating companies and the gas supply companies.
“As of the last estimate, we said N1.3 trillion is being owed to the five generating companies, while the legacy debt of the gas supply companies stood at $1.3 billion in 2023.
“The total tariff, the total subsidy for the tariff, was supposed to be N720 billion. The government only funded N400 billion living in total of over N300 billion brought forward to 2024. At the current pricing regime, we estimated that it will retain the tariff at current rates,” he added.
During Monday’s meeting with the lawmakers, the Minister stressed that Nigerians would need to bear the hike in electricity tariff because the federal government cannot afford to continue paying subsidies.
“The government will be needing about N2.8 trillion to subsidise electricity this year, and we look at the government budget itself, we look at the provision for subsidy, we discover and confirm that the government could not afford to pay.
“This government budget is N28 trillion, and N2.8 trillion is a subsidy for power separately. It is over 10 per cent of the budget, which is not realistic for us to ask the government to pay,” the Minister said.
Mr Adelabu also said the high level of indebtedness was what forced the government to remove subsidies on electricity and thereby increase the electricity tariff as announced by Nigerian Electricity Regulatory Commission (NERC).
In early April, NERC approved a tariff increment for Band A consumers (around 17 per cent of all consumers), allowing electricity distribution companies (DisCos) to raise electricity prices from N68 to N225 per kilowatt hour with effect from April 1.
He said, “We made it a conditional tariff, we made it a service reflective tariff, that the only condition that can make a discriminate company charge the new tariff of N225 per kilowatt hour is they must ensure they supply a minimum of 20 hours to that consumer every day. If they cannot sustain this within a period of seven days, such consumers must be granted to the old tax.”
