As earlier reported by The Explainer, Nigeria’s Minister of Power, Adebayo Adelabu, has said the country cannot afford to subsidise electricity any longer, urging for the adoption of a cost-reflective tariff model.
Speaking at a briefing in Abuja on Wednesday, Adelabu said that the country owes Generating Companies (GenCos) N1.3 trillion and gas companies $1.3 billion, which has hampered the supply and distribution of power in the country.
He said that only N450 billion was allocated to subsidy this year, but the ministry needs over N2 trillion to cover the gap between the current tariff and the actual cost of electricity.
“The subsidy regime is unsustainable and we need to move to a tariff that reflects the true cost of service. We also need to improve our metering system to ensure that customers pay for what they consume,” he said.
Adelabu also announced that state governments will be allowed to generate power independently and supply it, as part of the efforts to decentralise and diversify the power sector.
He said this will reduce the pressure on the national grid, which has experienced about six collapses since December 2023, due to various factors such as gas shortage, ageing equipment, limited evacuation capacity, and vandalism of power plants in some parts of the country.
He added that the Transmission Company of Nigeria (TCN) has over 100 unfinished projects across the country, because of differences in contract figures caused by fluctuations of the foreign exchange rate.
He disclosed that the ministry has directed the TCN to complete all the ongoing projects before awarding new ones, and to prioritise the critical ones that will enhance the stability and reliability of the grid.
The Minister also revealed that the 2024 budget has over N50 billion earmarked for the construction of small grids that will provide electricity to isolated and under-served locations, especially in rural areas.
“We are working hard to ensure that we deliver quality and affordable power to Nigerians. We are also open to new ideas and innovations that will help us achieve this goal. We appeal to everyone to support us in this journey, and to also play their part in ensuring the efficient and effective use of electricity,” he said.
