State governments have proposed total removal of subsidy payments for electricity.
The proposal is contained in a document by the Nigeria Governors’ Forum, titled, ‘Development of the National Integrated Electricity Policy and Strategic Implementation Plan Policy Recommendations by State Governments to the Federal Ministry of Power.’
The states have also proposed the implementation of different electricity tariffs in their respective states and running their different power markets under their own laws.
The recommendations are based on the enactment of the Electricity Act 2023 which establishes a multi-tier electricity market framework comprising of a (i) single, wholesale federal electricity market, and (ii) retail sub-national electricity markets. Both markets are, however, interlinked and interconnected by policies and regulations.
“Electricity is a commodity and a product that must be paid for by consumers. The states believe that electricity subsidies and other forms of financial interventions in the power sector by the Federal Government over the last 15 years have been inefficient and ineffective so far.”
They noted that the so-called electricity subsidies benefit only customers who are connected to the national grid and enjoy some form of supply reliability, while millions of households, particularly in underserved and unserved communities, pay more than twice the average true cost of on-grid supply.
The governors also urged the Federal Government to continue settling the N4 trillion legacy debts in the power sector created by the Federal Government under a single electricity market in NESI.
