Before 2024 comes to an end, the Federal Government has said it would have expended nothing less than N2.4 trillion on electricity subsidies.
This was made known by the Nigerian Electricity Regulatory Commission.
The NERC’s Commissioner of Planning, Research, and Strategy, Dr Yusuf Ali, explained how foreign exchange difficulties and adjustments of electricity tariffs impacted the subsidy negatively.
Speaking at the PwC’s Annual Power and Utilities Roundtable, themed ‘Reigniting Hope in Nigeria’s Electric Power Sector,’ in Lagos, Ali stated that as of November, the subsidy amount was N1.9tn.
However, with current trends, he pointed out that the monthly subsidy for electricity is expected to reach N2.4 trillion in the last month of the year.
For him, N2.4tn is a yearly estimate that could adjust depending on the monthly cost-benefit tariff.
Ali said on a monthly basis, the difference between the cost-reflective tariff and the approved tariff is calculated to determine the subsidy.
He said government is expected to finalise the total subsidy figure by end of 2024 depending on actual consumption and tariff trends.
Speaking at the programme, the Minister of Power, Adebayo Adelabu, was committed to tackling critical challenges in the nation’s health sector.
Represented by the Chief Technical Adviser to the Minister, Adedayo Olowoniyi, the boss of the ministry disclosed that it is in partnership with PricewaterhouseCoopers, and has developed a draft Integrated National Electricity Policy towards addressing the challenge.
Adelabu emphasised the importance of implementing cost-reflective tariffs to attract necessary investments and ensure the sector’s sustainability, noting that a market that does not create a line of sight of return for investors will not get investment.
He explained how the ministry had been reluctant in adopting cost-effective tariffs, adding that the ministry had no choice than to embrace it because it is a necessary step for achieving 24-hour electricity and universal access.
Highlighting the administration’s efforts under the Renewed Hope Agenda, including the implementation of the Electricity Act of 2023 and the Presidential Power Initiative in partnership with Siemens, Adelabu identified vandalism, ageing infrastructure, and inefficiencies in the electricity value chain as major challenges preventing better success.
The minister disclosed that the Transmission Company of Nigeria spent nearly N10bn in six months repairing vandalized towers, mentioning frequent grid disturbances due to capacity inadequacies and consistent vandalism as other challenges of the sector.
He called for collective responsibility among stakeholders, suggesting the need for stakeholders to be innovate in implementing bold ideas to restore confidence and deliver a sustainable energy future for all Nigerians.
