In a recent interview, Minister of Power, Adebayo Adelabu, disclosed that despite the recent tariff hike for Band A customers, the Federal Government continues to subsidize electricity. Band A customers, estimated to be around 1.5 million out of the total 12 million consumers in the sector, experienced this tariff increase.
During a monitored program, Adelabu highlighted that the government has allocated approximately N1.8 trillion for electricity subsidy in 2024. He emphasized that the Electricity Act of 2023 allows for tariff reviews twice a year, contrary to claims by human rights lawyer Femi Falana, who deemed the tariff increase for Band A consumers illegal.
Adelabu justified the necessity of tariff adjustments, attributing them to factors such as the rising dollar, escalating gas prices, and the expenses related to power generation, transmission, and distribution infrastructure over the past two years. He pointed out that maintaining the same tariff level over time would shift the burden of these increases onto someone else.
Regarding subsidy allocation, Adelabu explained that the Nigerian government bears a significant portion of the total production, transmission, and distribution costs, amounting to 67% before the tariff increase for Band A customers. However, he noted a reduction in the subsidy requirement due to the tariff adjustment, estimating a subsidy need of approximately N1.8 trillion.
On April 3, 2024, the Nigerian Electricity Regulatory Commission (NERC) raised the electricity tariff for Band A customers, who enjoy 20 hours of power supply daily. Despite criticism over the immediate impact of this hike on consumers amidst prevailing economic challenges, Adelabu clarified that the increase for Band A customers does not necessarily equate to a 200% rise in their electricity bills if power consumption is managed efficiently.
Assuring Band A customers of value for their money, Adelabu pledged regulatory oversight to prevent distribution companies from shortchanging consumers in other bands. He also emphasized the government's commitment to addressing inefficiencies among distribution companies and taking necessary actions to protect consumer interests.
