Tinubu stops electricity tariff hike, insists on subsidy

President Bola Tinubu has halted a proposed increase in electricity tariffs and has affirmed the continuation of subsidies on electricity across the nation. This announcement was made public by the Minister of Power, Adebayo Adelabu, during a press briefing held in Abuja on Wednesday.InformationGuideNigeria

Further to this development, Minister Adelabu disclosed that the Federal Government plans to review the legality of the extended licences that were granted to privatized power distribution and generation companies. The review comes as the original operating licences were set to expire on October 31, 2023.

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Additionally, Minister Adelabu took a stern stance on the performance of executives in the power ministry, declaring his readiness to dismiss any chief executive whose poor performance could jeopardize his position as ministerJAMB Result

Addressing the contentious issue of adjusting electricity tariffs to reflect actual costs—which would result in higher charges for consumers—Adelabu acknowledged the delicate nature of the power sector and its significance to both leaders and the citizens they serve.

“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.”JAMB Portal

He noted that the non-implementation of this was actually causing liquidity crisis in the sector, but stressed 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.

He explained that as at today, 75 to 80 per cent of Nigeria’s power was from gas power plants, “and their raw material is gas. So, once exchange rate goes up, the cost of gas also goes up and it affects the tariff.”

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