Minister of Power, Adebayo Adelabu, has said that the country’s economy can no longer afford to maintain electricity subsidies. He advised Nigerians to prepare for the introduction of tariffs that reflect the true costs of electricity.
At a meeting with the Chairmen of Nigeria’s Generating Companies in Abuja, Adelabu emphasized that, “We have to understand that our economy cannot sustain subsidies indefinitely.”
He, nonetheless, emphasized the government’s commitment to offering targeted subsidies to support economically disadvantaged Nigerians.
The Federal Government presently has an outstanding debt exceeding N4 trillion owed to Generating Companies (Gencos) for overdue subsidy payments.
In its performance report for February, the Nigerian Electricity Regulatory Commission (NERC) indicated that the average real tariff stands at N116.18 per kilowatt-hour, whereas consumers are charged N88.2 per kilowatt-hour.
In February, the subsidy cost per kilowatt-hour was represented by the gap between the real tariff and the average collection, which amounted to N27.97 kWh.
All NESI customers, except for the 15 percent classified as Band A, benefit from a subsidy.
Mr. Bolaji Tunji, Adelabu’s spokesperson, reported that the minister emphasized to the power generation companies that, “Citizens must pay the appropriate price for the energy consumed. The Federal Government will continue to provide targeted subsidies for economically disadvantaged Nigerians.”
Adelabu mentioned that the Federal Government is committed to addressing a significant portion of the N4 trillion debt that is hindering power generation in the country. This will be done using cash and financial tools like promissory notes.
He said, “There is a need to pay a substantial amount of the debt in cash. At the minimum, let us pay a substantial amount, then ask for a debt instrument in promissory notes to pay the rest.
“We recognise the urgency of this matter. The government is committed to resolving this debt to stabilise the sector and prevent further crisis.”