The Minister of Power, Adebayo Adelabu, has said there would be no going back with the new tariff regime for Band A consumers despite calls for its reversal.
Adelabu made this known in Abuja on Friday.
He attributed the government’s action to it’s inability to continue paying humongous sums as power subsidy, stressing that subsidy on electricity for 2024 would cost the government about N2.9tn.
The minister said, “We are in the subsidy pricing regime, whereby the government provides a large portion of the cost of producing, transmitting, and distributing power.
“I must tell you that as of today, before the introduction of the tariff increase, the government is subsidising nothing less than 67 per cent of the cost of producing, transmitting and distributing electricity in Nigeria.
“At the current exchange rate, this is going to translate into N2.9tn for 2024. This is more than 10 per cent of the national budget. The power sector is just a single sector out of the many sectors that the government has to attend to.”
Adelabu said other sectors and ministries were competing for government funding and that “it will be very insensitive on our part to force or compel the government to continue to subsidise at the rate of almost N3tn for the power sector alone. We just have to be realistic and considerate.”
He by withdrawing the subsidy for band A customers, the government would save about N1.4tn, adding that this fund would be channelled into the development of other sectors such as health, education, works, etc.
The minister said the increase in the tariff was pro-poor, as those affected were mainly residents who could afford the cost, but noted that subsidy on electricity was only going to be for the short term.
The FG plans to end the subsidy on power within three years, and the withdrawal of subsidy from band A customers is just the pilot phase, Adelabu said.
He said, “This tariff review conforms with our policy thrust of maintaining a subsidised pricing regime in the short run or the short term with a transition plan to achieve a full cost-reflective tariff for over a period of, let us say three years.
“I have mentioned it in a couple of media briefings that it is because of the government’s sensitivity to the pains of our people that we will not make us migrate fully into a cost- reflective tariff or remove subsidy 100 per cent in the power sector like it was done in oil and gas sector.
“This is more like a pilot for us at the Ministry of Power and our agencies. It is like a proof of concept that those that have the infrastructure sufficient enough to deliver stable power and enjoy 20 hours of light to be the ones to get tariff hike.”
