FG to Stop Electricity Subsidy in 2022
By Adedapo Adesanya
From January 2022, the federal government will no longer pay the N30 billion electricity subsidy, meaning that Nigerians will have to pay more to get electricity.
This was disclosed by the Special Adviser to the President on infrastructure, Mr Ahmed Zakari, at a stakeholders engagement meeting organised by the Nigerian Electricity Commission (NERC) in Lagos.
According to him, exiting its power sector intervention fund will allow the electricity market to run on its own, leaving demand and supply, and market participants to determine prices.
This is coming at a time when the country’s power sector is facing a revenue shortfall due to a tariff regime that is not cost-reflective as data from the Nigerian Bulk Electricity Trading Plc (NBET) showed that the tariff being collected by distribution companies is below 50 per cent of their invoices.
Speaking during the stakeholders’ engagement meeting, Mr Zakari, said: “We must move to a market where a person that buys power, pays for power. A Disco that buys power, pays for that power from the Genco that gives power.”
“It is very simple. It’s called commerce. Having middle structures in a way that promotes a lack of accountability does not work. And this administration is committed to making this a level playing field,” he further said.
The federal government and the labour unions had gone into extensive discussions prior to the implementation of the Service-Based Tariff in November 2020, where the NERC had promised improvement in service delivery to Nigerians.
The federal government pays for roughly 11 per cent of the citizens’ demand for electricity despite huge government interventions in the power sector.
According to Mr Zakari, Nigeria has one of the poorest supplies of electricity despite the power sector contributing 78 per cent to GDP growth for the second quarter of 2021.