The International Monetary Fund (IMF) has recommended that the Bola Tinubu-led administration in Nigeria phase out electricity subsidies entirely, despite the ongoing challenges faced by Nigerians following the removal of fuel subsidies in May 2023.
In its recently published ‘Post Financing Assessment (PFA)’ report, the IMF emphasised that the federal government had stretched its resources, advising for the complete removal of both fuel and electricity subsidies as a means to restore macroeconomic stability.
The IMF’s suggestion aligns with the government’s own acknowledgment late last year that electricity subsidies from January to September 2023 amounted to N375.8 billion, with consumers paying a total of N782.6 billion for electricity during the same period.
While commending the federal government for the reforms implemented thus far, the IMF reiterated its stance that fuel and electricity subsidies should be phased out, considering the economic circumstances.
The Nigerian Electricity Regulatory Commission (NERC) disclosed that the government subsidised electricity in the first, second, and third quarters of 2023. Despite power distribution companies billing consumers a total of N1.06 trillion during the nine months, they received only N782.6 billion, despite widespread blackouts across the country.
Subsidy payments increased significantly throughout the year, with the government subsidising power by N36 billion in the first quarter of 2023, rising to N135.2 billion in the second quarter, and further escalating to N204.6 billion in the third quarter. Figures for the fourth quarter are pending as the year is ongoing.
