The federal government on Friday denied plans to end electricity subsidy or increase tariffs in the immediate term after the Minister of Power, Mr. Joseph Tegbe, said the administration intended to bring the power subsidy regime to an end by next year as part of efforts to address the sector’s mounting liquidity crisis.
The minister, however, later clarified that there was no policy to raise electricity tariffs or remove subsidies for now, insisting that the government’s immediate priority is to improve power supply, expand metering, strengthen the transmission network and stabilise the national grid.
Tegbe, stated this on Friday in Lagos at a national media roundtable on “Resetting Nigeria’s Power Sector.”
“Let me address two issues. The first is that, there’s no policy by this administration to increase electricity tariff beyond the current rate,” Tegbe said.
“If anybody is giving you information or telling you we want to increase tariff, put everybody in band A, please, in the immediate term, nothing like that. And tell Nigerians, nothing like that. I’m making a categorical statement. There’s no plan to do that,” he added.
To address liquidity challenges, he said government is advancing a Power Sector Bond initiative to settle legacy debts owed to generation companies and gas suppliers, adding that the sector currently carries about N3.3 trillion in debt.
“We have the mandate of Mr. President to clear the legacy debt and come up with sustainable structures to make sure this doesn’t pile up anymore. I promise you, next year, by God’s grace, we will put a stop to this so-called subsidy in the power sector,” Tegbe had said.
However, the minister backtracked shortly after making the announcement, probably realising the political implication of such a policy, ruling out any plan to increase electricity tariff or end subsidy in the immediate term.
While the Nigerian Electricity Regulatory Commission (NERC) computes cost-reflective tariffs based on prevailing macroeconomic variables, including the naira exchange rate, inflation, gas prices and generation costs, however, government policy has consistently prevented the sector from charging most consumers these full rates.
Apart from ‘Band A’ customers, whose tariff rose from around N68 per kilowatt-hour to approximately N225 per kilowatt-hour, the government still retains subsidy for customers in Bands B, C, D and E.
At the moment, the government still has an estimated N200 billion monthly subsidy for non-Band A consumers. While it has not been forthcoming on the actual amount it owes the operators, Gencos have said that the debt has now exceeded N7 trillion as of June this year.
Tegbe said the President Bola Tinubu administration was focused on making electricity “a catalyst for national productivity rather than a constraint to economic growth” through a new agenda tagged “Resetting the Sector.”
“This conversation therefore marks the beginning of a new chapter of openness, accountability and collaboration. Above all, it marks the beginning of what we have appropriately termed ‘Resetting the Sector,’” the minister said.
He noted that resetting does not discount past reforms, saying it means building decisively upon the unprecedented reforms already initiated by current administration whilst addressing long-standing structural deficiencies that have prevented the sector from reaching its full potential.
According to him, the objective was to make electricity more available, the grid more reliable, the market financially sustainable and restore investor confidence.
Tegbe credited President Tinubu with demonstrating the strongest political commitment to electricity sector reform since the liberalisation of the industry, citing the full implementation of the Electricity Act which now allows states to develop their own electricity markets.
“Rather than viewing decentralisation as a threat, this administration has embraced it as an opportunity to unleash innovation, competition and investment across the federation,” he said.
On consumer protection, Tegbe said government would continue to examine mechanisms to shield vulnerable Nigerians while pursuing financial sustainability. “There are Nigerians that can’t afford to adequately pay for power. These are the vulnerable groups. We want to protect them,” he stated.
The minister also announced a series of immediate interventions, iincluding the inauguration of Power Force, a programme to engage 5,000 Nigerian youths for nationwide meter installation, progress on resolving meter procurement challenges, and the Presidential Metering Initiative aimed at ending estimated billing.
On generation, Tegbe said the country has recorded improved output in recent weeks. “We are already witnessing encouraging improvements in electricity generation. Over the course of the last two weeks, we have consistently generated 5000MW,” he said, adding that Nigerians are now enjoying up to 16 hours of supply daily.
“Someday, in the next 2-3 years, we might have lights for 24 hours or 22 hours. God’s willing,” he said.
The ministry has also articulated a sector-wide transformation plan. Key items include a technical audit of the national transmission network to identify ageing assets and bottlenecks, harmonisation of federal and state electricity regulation, and a Grid Stabilisation Programme targeting three critical corridors: Lagos; Enugu–Port Harcourt; and Abuja–Kaduna–Kano.
Other initiatives are sector liquidity and loss reduction, strategic asset centralisation, and the Super Grid Programme to expand the transmission backbone.
Tegbe explained that asset centralisation will be done through two new vehicles: the Generating Asset Management Company (GAMCO), and the Renewable Assets Management Company (RAMCO).
“What we plan to do in that space, which is called GAMCo, is to put assets together… and using those assets to raise funds based on their balance sheet. And if we’re able to do that, we’re doing the same thing in RAMCo,” he said.
He said the assets will be used to raise medium to long-term financing because those assets only produce stable, long-term cash flow.
The minister stressed that execution, not rhetoric, will define the reset, insisting that resetting the sector is not about buzzwords but about execution, discipline, coordination and manoeuvre.
“Our mission is very clear. Reliable electricity that powers our homes, competitive electricity that powers our industries, sustainable electricity that attracts investment and inclusive electricity that reaches every Nigerian”, he stated.
He said that about seven million metres will be rolled out in the next three years, starting with 1.55 million waitin the next six months.
The minister also said that going forward, there will be no more political installation of power equipments, particularly transformers in areas where they are not needed.
He assured that Nigerians will witness improved electricity supply in six months time.
Peter Uzoho and Oluchi Chibuzor
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