Nigeria’s Minister of Power, Adebayo Adelabu, on Wednesday revealed that President Bola Tinubu has stopped the implementation of a hike in electricity tariff, insisting that subsidy be paid on power consumed nationwide.
The minister, who spoke at a press briefing in Abuja, stated that the Federal Government would investigate the legality of the five-year licence extension given to privatised power distribution and generation companies.
Adelabu noted that the operating licences of the firms would have expired on October 31, 2023.
The Minister while speaking on the call for a cost reflective tariff, that would translate to a hike in the amount payable for power, said:
“The power sector is an industry that is very sensitive to any leader.
“You cannot jump overnight and implement the cost reflective tariff. I can tell you that till today the government still subsidises power. Tariff should have been raised months back, but Mr President said until we are able to achieve regular and incremental power supply we can’t touch the tariff.
“So the there is a gap between the cost reflective tariff that we are supposed to charge and the allowed tariff. That huge gap the government is still handling it as subsidy. This affects liquidity in the system, investments and causes so many constraints.”
He argued that the non-implementation was responsible for liquidity crisis in the sector, stressing that the President had refused to allow a raise in electricity rate.
“Now, I never said that it is not yet time to charge cost reflective tariff. Rather, I said cost reflective tariff is supposed to have been implemented months ago because it is the source of liquidity to the system.
“But for political reasons and empathy, you cannot cause additional burden on Nigerians. We just had the removal of fuel subsidy, we are talking about exchange rate skyrocketing, galloping inflation and so many others that bring hardship to the people.
“And Mr President is trying to relieve this hardship through various forms of palliatives. So it is not politically expedient and reasonable to now implement a tariff that is more like dumping the existing tariff.
“We are now paying about N70 (per kilowatt-hour), and it can never be less than N130 or N140 at the exchange rate of today if we are to implement a cost reflective tariff. Because part of the reasons for an increased tariff is the price of gas, which is paid in dollars,” Adelabu stated.
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