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Nigerian govt confirms removal of subsidy on electricity tariff



Gencos, Discos deny receiving N200bn payment from Nigerian govt

Despite spiralling state of the economy which has shrunk the earning and purchasing power of most Nigerians, electricity might also become a premium product, considering the removal of subsidies.

This was confirmed on Wednesday by the Nigerian Electricity Regulatory Commission which disclosed that the Federal Government had put a halt to the payment of electricity subsidy amounting to N600bn.

Sanusi Garba, the NERC Chairman noted this, during a press briefing about the challenges bedeviling the power sector, in Abuja.

He disclosed that the payment of subsidies by the FG is unsustainable due to the expected profit returns by investors.

“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,” the NERC Chairman said.

He further disclosed the exact amount as stated by the Minister of Finance, Zainab Ahmed during a press briefing, some days earlier.

“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.

“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.

Last week, the Minister of Finance, Zainab Ahmed had alluded to the total removal of electricity subsidies.

Read also: Rising cooking gas prices, electricity tariffs will worsen plight of Nigerians —CAN

Ahmed disclosed this at a virtual meeting of African Finance Ministers with the theme, “The political economy of fiscal reforms.”

She said, “We are cleaning up our subsidies. We had a setback; we were to remove fuel subsidy by July this year but there was a lot of pushback from the polity.

“We have elections coming and because of the hardship that companies and citizens went through during the COVID-19 pandemic, we just felt that the time was not right, so we pulled back on that.”

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