Tinubu Halts Power Tariff Spike Advocates Subsidies

Tinubu Halts Power Tariff Spike, Advocates Subsidies

President Bola Tinubu has put a halt to the proposed increase in electricity tariffs and has called for continued subsidies on power consumption across the nation. This revelation came from the Minister of Power, Adebayo Adelabu, who spoke on the matter in Abuja.

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Adelabu also disclosed that the government is scrutinising the legality of a five-year licence extension granted to privatised power distribution and generation companies, which were due to expire on October 31, 2023.

The Minister warned that he would dismiss any underperforming chief executives within the power ministry’s agencies if their lack of results threatened his position. He highlighted the sensitivity of the power sector and the government’s reluctance to implement a cost-reflective tariff due to the economic burden it would place on Nigerians, already grappling with fuel subsidy removal, soaring exchange rates, and inflation.

Adelabu pointed out that the government is currently subsidising the gap between the cost-reflective tariff and the allowed tariff, which affects the sector’s liquidity and investment. He stressed that any tariff increase would be preceded by extensive public sensitisation and assurances of regular power supply.

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The minister expressed dissatisfaction with Nigeria’s current power generation of about 4,000 megawatts, labelling it as shameful and unacceptable, and emphasised the need for improvement.

He also noted the possibility of the government taking control of the power distribution companies, despite owning only a 40% stake, and the potential review of their territorial coverage due to underperformance.

Editorial

President Tinubu’s decision to prevent an increase in electricity tariffs and to maintain subsidies is a move that reflects a deep understanding of the current economic pressures facing Nigerians.

While the intent to shield the populace from additional financial burdens is laudable, it also underscores the fragile state of Nigeria’s power sector and the complex interplay between economic policy and social welfare.

The Minister of Power’s stance on performance is a clarion call for efficiency and accountability within the sector. The power industry, being the backbone of the nation’s economy, requires not just competent leadership but also a robust framework that ensures sustainability and growth.

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The government’s scrutiny of the privatisation process and the legalities of licence extensions is a step towards rectifying past missteps and aligning the sector’s trajectory with national interests.

However, the challenge remains to balance the immediate relief provided by subsidies with the long-term need for a financially viable power sector. Subsidies, while cushioning consumers, can distort market dynamics and deter investment.

The government’s approach must, therefore, be twofold: to protect consumers in the short term while laying the groundwork for a self-sustaining power sector that can attract investment and drive growth.

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Did You Know?

  • Nigeria’s power sector was privatised in 2013, to improve efficiency and attract private investment.
  • The cost-reflective tariff is designed to reflect the actual cost of electricity production and distribution, promoting sector viability.
  • Subsidies in the power sector are used to bridge the gap between the cost-reflective tariff and the tariff consumers are charged, to keep electricity affordable.
  • Nigeria’s power generation capacity is significantly lower than its potential, with many citizens still lacking reliable access to electricity.
  • The performance of Nigeria’s power sector is critical to the country’s economic development, as it affects industries, businesses, and the overall quality of life for its citizens.

 

 

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Author

  • Zainab Sulaimon

    Zainab Abisola Sulaimon is a news content writer who loves fashion design, reading, chatting, and dancing. In addition, she's devoted to her three-year-old Samoyed dog Zoey. She has always been fascinated with the art of writing, and she enjoys anything related to fashion, design, and reading. Zainab spends most of her free time browsing different blogs on these topics (sometimes even at work). She also can't resist chatting with friends online or in person about everything that makes life worth living - from food to family events! Dancing is another excellent exercise for Zainab that keeps her fit while having fun!

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