In a move reflecting a broader shift in policy, the Nigerian Electricity Regulatory Commission (NERC) recently sanctioned a tariff hike for customers classified under the Band A category.
Following swiftly in its wake, the Federal Government has now hinted at a comparable measure set to extend to other customer segments.
During a press briefing held in Abuja on Friday, Minister of Power, Adebayo Adelabu, outlined the recent tariff adjustment as a pivotal step in the gradual elimination of electricity subsidies across the nation.
Emphasising the government’s intent to foster investment in the power sector, Adelabu elaborated on plans to eradicate all subsidies, thereby facilitating a more sustainable economic environment.
Addressing reporters, the Minister stated, “This tariff review aligns with our strategic objective of maintaining a subsidised pricing framework in the short term, with a transition plan towards achieving a fully cost-reflective tariff over a stipulated period, perhaps three years.” He underscored the government’s commitment to a phased approach, citing considerations for the populace’s welfare amidst economic adjustments.
“We are cognizant of the challenges faced by our citizens and remain steadfast in our commitment to alleviating their burdens,” Adelabu continued. “Hence, we advocate for a gradual transition from subsidy reliance to a tariff structure reflective of actual costs, commencing with select customer segments.”
Highlighting the rationale behind the Band A tariff revision, Adelabu emphasised the comparative affordability for consumers, noting that the current charges pale in comparison to alternative energy expenses such as diesel.
Offering insight into Nigeria’s subsidy paradigm, the minister elucidated the substantial governmental support previously extended to the electricity sector. “Previously, the government subsidised approximately 67% of electricity costs, amounting to a projected expenditure of N2.9 trillion for 2024,” he remarked. “Such expenditure, exceeding 10% of the national budget, underscores the impracticality of sustained subsidy provision amidst competing fiscal priorities.”
In concluding remarks, Adelabu affirmed the government’s unwavering commitment to fiscal prudence and equitable economic policies, signalling a paradigm shift towards a self-sustaining power sector model.
The government’s indication of extending electricity tariff adjustments beyond Band A customers underscores a significant policy transition aimed at fostering sustainability and investment in Nigeria’s energy landscape.
