The Federal Government may reverse its decision to subsidise electricity tariff as the Minister of Power, Adebayo Adelabu, said the sector is under heavy debt.
Power supply to homes and industries have drastically dropped amid over N1.3 trillion indebtedness to power generation companies (GenCos) and other $1.3 billion to gas producers.
The Federal Government in the last nine years have dilly-dallied with the power sector. Perpetually handing over the sector to Ministers and head of agencies who have no technical expertise to overturn the despondent state of sector, President Bola Tinubu had suspended the increase in tariff in July last year and also truncated the January Multi Year Tariff Order which doubled the cost of electricity tariff.
But Adelabu yesterday in Abuja said there cost reflective tariff remained the leeway for the sector, adding that only N450 billion was budgeted for electricity subsidy in 2024.
The subsidy, according to the Nigerian Electricity Regulatory Commission (NERC) stands at about N1.6 trillion.
Adelabu went above NERC’s projections to say about N2 trillion would be needed for the government to meet up with the subsidy.
Coming after the International Monetary Fund (IMF) asked Nigeria to remove both
electricity and petrol subsidies, in the cost reflective tariff of NERC, most consumers, would see their tariff double as customers would pay close to between N70 to N160 for every kilowatt per hour.
Adelabu also said the devaluation of the naira has also crippled a lot of projects in the sector, adding that over 100 projects being handled by the Transmission Company of Nigeria is being abandoned.
The company, according to him would not embark on a new project until the abandoned projects are being completed.
Speaking on the repeated grid collapse, Adelabu said shortage of gas, ageing machines in the grid value chain, low capacity to evacuate generated power, and destruction of power stations were fueling the crisis.
