Daud Olatunji
Amidst mounting financial strains within Nigeria’s electricity sector, the Presidency has articulated a compelling case for the necessity of increasing electricity tariffs, with a focus on alleviating the burden of subsidies.
The Federal Government has unveiled plans to eliminate electricity subsidies for 15 percent of consumers, a move projected to yield substantial annual savings of approximately N1.1 trillion,
The President’s Special Adviser on Information and Strategy,Bayo Onanuga, disclosed this in an interview with Bloomberg.
Onanuga emphasized the imperative nature of the proposed tariff adjustment, attributing it to the exorbitant costs associated with sustaining the current subsidy framework.
He said that under the leadership of Bola Tinubu, the administration is resolute in its commitment to permit a price hike in electricity, underscored by the allocation of a significant N450 billion budget for energy subsidies in 2024.
According to him, in practical terms, power distribution companies are slated to increase prices from N68 to N200 per kilowatt-hour for urban consumers come April, a measure intended to facilitate cost recovery and bolster investment prospects for Discos.
The presidency said the rationale behind the tariff increase stems from the necessity to realign electricity tariffs with the prevailing economic realities, particularly amidst the escalating costs of gas and the mounting subsidy burden.
While acknowledging potential concerns regarding the impact of tariff adjustments on consumers,
Onanuga assured that the proposed increase would predominantly affect high-consuming sectors, thus mitigating the burden on the general populace.
Furthermore, the Federal Government pledges support to power generating companies in settling outstanding debts, fostering a more sustainable operating environment within the energy sector.
Recent reports from the National Bureau of Statistics highlight the pressing need for tariff adjustments, as electricity distribution companies witnessed a notable surge in revenues to N1.1 trillion in 2023, despite persistent challenges such as intermittent power supply and infrastructure deficiencies.
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