FG removes N600bn electricity subsidy, confirms power tariff hike

17 Mar FG removes N600bn electricity subsidy, confirms power tariff hike

The Nigerian Electricity Regulatory Commission on Wednesday said that subsidy on power amounting to about N600bn has now been stopped by the Federal Government.

It explained that electricity tariffs were raised in February this year, and was quick to, however, state that the tariff payable by some customers in the franchise area of one of the distribution companies was reduced.

Speaking at a press briefing in Abuja on the challenges in the power sector and other issues, the Chairman, NERC, Sanusi Garba, stated that subsidy on electricity was a policy issue of the Federal Government that had to be halted.

He said, “The role of the commission is to make a determination of the rates that consumers should pay. So we strike a balance between consumers and investors.

“Now subsidy is a policy issue determined by the government. The government will decide that the rates calculated or agreed by the regulator may at this time not be passed on to consumers. It has happened many times.

“In the past four, five years the level of subsidy has gradually been reduced, because you cannot run the electricity market on life support and say that investors cannot get their return on investment until government steps in to provide the required funding.”

Garba added, “So that policy decision (stopping electricity subsidy) is as announced by the Minister of Finance. The subsidies have been, at one time as high as N600bn a year, and gradually coming down to about N30bn or so this year.”

On concerns about the rise in electricity tariffs, the NERC boss stated that the adjustment was made in February this year following some economic fundamentals considered by the commission.

“What happened on February 1, 2022, is a minor review of tariff. It is very clear on our website that every six months we will adjust rates to take care of the foreign exchange component of cost and also inflation,” he stated.

Garba described the tariff adjustment as absolutely straightforward, stressing that the distribution companies were meant to inform their customers of the changes.

On the recent blackouts and repeated collapse of the national electricity grid, the NERC chairman said the rupturing of gas pipelines by vandals and routine maintenance works on some power plants contributed to the instability of the country’s power system.