After the Nigerian Electricity Regulatory Commission (NERC) announced a rise in electricity rates for Band A customers, the Federal Government suggested that a similar adjustment could apply to other groups.
During a briefing in Abuja, Minister of Power Adebayo Adelabu stated that the recent tariff hike is a trial phase toward eliminating electricity subsidies nationwide.
The government aims to phase out all subsidies in the sector to encourage investment and growth in the power industry.
Adelabu said, “This tariff review is in conformity with our policy thrust of maintaining a subsidised pricing regime in the short run or the short term with a transition plan to achieve a full cost reflective tariff for over a period of, let us say three years.
“I have mentioned it in a couple of media briefings that it is because of government sensitivity to the pains of our people that we will not make us migrate fully into a cost reflective tariff or to remove subsidy 100 percent in the power sector like it was done in oil and gas sector.
“We are not ready to aggravate the sufferings any longer which is why we said it must be a journey rather than a destination and the journey starts from now on, that we should do a gradual migration from the subsidy regime to a full cost reflective regime and we must start with some customers.
“This is more like a pilot for us at the Ministry of Power and our agencies. It is like a proof of concept that those that have the infrastructure sufficient enough to deliver stable power of enjoying 20 hours of light to be the ones to get tariff add.”
The Minister added that Band A customers are charged N225 kilowatts per hour, which is little relative to the N500 they pay for alternative energy like diesel and others.
The Minister stated that customers in the N225 kilowatt per hour Band A category pay significantly less than the N500 they spend on alternative energy sources such as diesel.
He noted that Nigeria currently operates under a subsidy pricing system, with the government covering a substantial portion of the expenses for electricity generation, transmission, and distribution.
Previously, the government subsidised 67% of these costs.
