Saturday, November 30, 2024 -The Federal Government’s electricity subsidy has surged by 269%, rising from ₦650 billion in 2023 to an estimated ₦2.4 trillion in 2024.
This increase comes despite the implementation of the Band A tariff
service category in April, which was expected to reduce subsidy obligations by
₦1.14 trillion.
Dr Yusuf Ali, Commissioner for Planning, Research, and Strategy at the
Nigerian Electricity Regulatory Commission (NERC), revealed this during a
presentation at PwC’s Annual Power and Utilities Roundtable in Lagos on Friday.
Speaking on “Reigniting Hope in Nigeria’s Electric Power
Sector,” Dr Ali noted that macroeconomic shocks, particularly foreign
exchange instability, have driven cost-reflective tariffs up by 118% between
2023 and 2024, contributing to the steep rise in subsidies.
“So right now, the best estimate that we have for 2024 is that the
cumulative subsidy for the year will be ₦2.4 trillion,” Dr. Ali said.
He explained that while the government aimed to significantly reduce
subsidies through tariff increases in April 2024, the challenging macroeconomic
environment has hindered tariff payments.
“Without the tariff reforms implemented between 2020 and 2023, annual
subsidies would have risen significantly, especially amidst the macroeconomic
shocks of the past 20 months,” he added.
Minister of Power, Chief Adebayo Adelabu, represented by his Chief
Technical Assistant, Adedayo Olowoniyi, highlighted the government’s efforts to
address the challenges in the power sector. He emphasized that the current
administration, under President Bola Ahmed Tinubu, recognizes energy as
critical to economic growth and job creation.
“To ensure the sustainability of the energy sector, the Federal
Government of Nigeria has implemented a multi-pronged approach spanning across
legislation with the enactment of the Electricity Act 2023, policy framework
with the development of an Integrated National Electricity Policy, and
infrastructure development programmes to expedite expansion,” he said.
The minister outlined additional strategies, including leveraging
bilateral funding, commercializing the sector to enhance viability, and
collaborating with development partners to address bottlenecks in the Nigerian
Electricity Supply Industry value chain.
“Our successes have not been without challenges. We have recorded
frequent grid disturbances and dips in supply levels due to ageing
infrastructure, resource limitations, capacity inadequacies, and consistent
vandalism of transmission networks,” he noted.
To address these issues, the government has implemented short-term
measures, such as enhancing maintenance plans for critical substations,
replacing outdated equipment, and conducting data-driven analysis to prevent
disruptions.
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