Just Like Fuel Subsidy Removal, Tinubu’s Government Shocks Nigerians Again As It Plans To Cut Electricity Subsidy
In a recent initiative aimed at revamping the electricity sector, President Bola Tinubu’ s government has announced plans to escalate electricity tariffs, affecting around 15% of consumers. This move is a strategic effort to reduce the nation’ s hefty N3. 3 trillion ($2. 6 billion) subsidy expense, thereby alleviating the financial strain on Nigeria’ s public funds.
This decision was disclosed by Mr. Bayo Onanuga, the President’ s Special Adviser on Information & Strategy. The announcement comes amid growing calls for the government to permit an increase in electricity prices, a step seen as crucial for the sector’ s financial viability. Currently, the government has earmarked N450 billion for electricity subsidies for the year.
The call for tariff adjustments is not new. Nigeria last revisited its electricity pricing structure in 2020. The urgency for change was highlighted by Chief Adebayo Adelabu, the Minister of Power, earlier in February. He emphasized the necessity for Nigeria to transition to a full cost- reflective tariff model, especially since the federal government is facing challenges in managing subsidy payments due to the market.
During a nationwide tour of power facilities, Adelabu pointed out the dire state of electricity supply in the country, attributing it to several factors, including unpaid subsidy debts. He also highlighted the underperformance of the National Independent Power Plants (NIPPs), managed by the Niger Delta Power Holding Company Plc (NDPHC), which are operating at less than 25% capacity due to inconsistencies in gas supply.
Part of Adelabu’ s inspection included visits to significant power generating plants like the 750 megawatts (MW) Olorunsogo Power Generating Plant in Ogun State and the 500MW Omotosho Generating Plant in Ondo State. These visits underscore the challenges within Nigeria’ s power sector, ranging from financial constraints to infrastructural inefficiencies.
This tariff increase is part of broader reforms intended to make the electricity sector more financially sustainable and efficient. By reducing subsidies, the administration aims to encourage investment and improvements in the sector, ultimately leading to better service delivery and reliability for consumers. This approach reflects a growing recognition of the need for systemic changes within the sector to address longstanding issues of underinvestment, mismanagement, and inefficiency.
The focus on revamping the electricity sector is crucial for Nigeria’ s economic growth and development. A reliable and efficient power supply is fundamental to business operations, industrial growth, and the overall quality of life for Nigerians. By taking steps to address the financial sustainability of the sector, the government hopes to lay the groundwork for more stable and consistent electricity provision across the country.
