Minister of Power Adebayo Adelabu says the introduction of Band A with a higher tariff has reduced electricity subsidy from about N3 trillion to N1 trillion.
The minister said this at the public hearing on electricity tariffs in Abuja on Tuesday, June 11, 2024.
The hearing was organised by the House of Representatives Joint Committee on Power, Commerce, National Planning, and Delegated Legislation.
Adelabu said without an increase in electricity tariffs, the expected subsidy would have been close to N3 trillion.
He said the federal government could not afford to pay N3 trillion in subsidies
The minister stated that instead of piling up debt for the government, the ministry came up with a model for customers to pay for subsidies on Band A, adding that this will compensate for the fuel and diesel consumers are using.
Adelabu said money consumers spend now is cheaper compared to fuel and diesel, even with the increase in electricity tariff.
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Adelabu said: “We are still about the cheapest, even in sub-Saharan, in spite of the tariff. Our neighbouring countries pay higher. So the price isn’t comparable.
“Band A is cheaper compared to other sources of generating power. It is almost 50 per cent cheaper to connect to Band A of the national grid than to run on fuel and diesel.
“So when we complain about the higher tariff, it is cheaper for any business to pay for a grid connection than to individually generate power.”
The minister stated that President Bola Tinubu`s administration meant well for Nigerians, adding that he would not aggravate an already bad situation in the country.
“We are out to make things better for Nigeria and to create industrial development through our local manufacturing, and energy is needed to do this,” he said.
The minister stressed that the increase in tariff was not targeted at making life difficult for Nigerians but to make life affordable for the people.
Speaking, the Deputy Speaker of the House of Representatives, Benjamin Kalu, said the decision by the Nigeria Electricity Regulatory Commission (NERC) to increase electricity tariff sparked widespread discontent.
Kalu said the justification provided for the tariff hike as outlined by NERC was to address the industry’s mounting debt and ensure the continued functioning of the power sector.
The lawmaker noted that it was evident that the move had not been well-received by the citizenry, adding that the fears expressed by many were valid.
He stated that such a sharp increase in electricity tariff would only exacerbate the economic hardships already faced by our people.
Kalu said lawmakers are committed to working closely with the executive to transform the power sector into a model of efficiency and sustainability as outlined in the legislative agenda.
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