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Power subsidy remains as Tinubu halts fresh electricity tariff hikes, says Minister

*Adebayo Adelabu, Minister for Power, discloses President Bola Ahmed Tinubu insists that any upward adjustments to tariffs can occur only after extensive public awareness campaigns coupled with a consistent and incremental power supply guaranteed to Nigerian electricity consumers, describing the 2013 Federal Government’s privatisation of the country’s power sector as ‘a regrettable decision’

Isola Moses | ConsumerConnect

As part of measures to attain incremental power supply to homes, businesses and organisations, the Federal Government has stated it still subsidises the power sector of the Nigerian economy.

ConsumerConnect reports Mr. Adebayo Adelabu, Honourable Minister for Power disclosed this development at a press conference held Wednesday, November 8, 2023, in Abuja, FCT.

Mr. Adebayo Adelabu, Honourable Minister for Power

Adelabu also read out the riot act to industry stakeholders, promising to dismiss any underperforming Chief Executives of agencies and parastatals within the Ministry.

Why Tinubu halts implementation of power tariff hikes

The Minister also explained: “The power sector is an industry that is very sensitive to any leader.

“You cannot jump overnight and implement the cost-reflective tariff.”

He stated: “I can tell you that, until today the government still subsidises power.

“The tariffs 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 tariffs.”

According to the Minister, following the expiration of operational licences of the electricity Distribution Companies (DisCos) and Generation Companies (GenCos) recently, President Bola Ahmed Tinubu intervened to stop a planned electricity tariff increments, and insisted on nationwide power consumption of subsidies in the sector.

Government to scrutinise 5-year licence extension to DisCos, GenCos

Adelabu also announced the Federal Government’s intent to scrutinise the five-year licence extension granted to privatised power distribution and generation companies, which would have expired October 31, 2023.

“So 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 as subsidy.

“This affects liquidity in the system, investments and causes so many constraints,” Adelabu said.

The Minister, however, acknowledged that absence of implementation of the tariff hike proposal had triggered a liquidity crisis in the sector.

Yet, he emphasised that President Tinubu had rejected any increase in electricity rates in the power industry.

Adelabu further clarified his submission on the burning tariff hikes issue, saying, “however, I never said that it is not yet time to charge a 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.”

The Minister for Power asserted: “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 the 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.”

Adelabu said: “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.”

According to him, currently, 75 to 80 percent of Nigeria’s power is sourced from gas power plants, and their primary input is gas.

Consequently, as the exchange rate rises, the cost of gas also increases, impacting the electricity tariffs in Nigeria.

The Minister also stressed that any adjustments to the tariffs would occur after extensive public awareness campaigns and when a consistent and incremental power supply is guaranteed.

Adelabu on power generation update

The Minister, while speaking on power generation in the country, expressed dissatisfaction with the current capacity of about 4,000 megawatts, deeming it inadequate, as he equally noted ongoing efforts at improving on this power generation capacity.

Meet expectations on Tinubu’s mandate or risk dismissal, Minister warns agencies’ CEOs

In line with the President’s directive, Adelabu restated that any senior government official within the Ministry of Power, or its affiliated agencies, who fails to meet expectations would face termination. The imperative is that Cabinet Ministers must deliver or face dismissal, according to him.

He said: “I’m using this medium to tell my colleagues who will work with me that if your activity is not supporting my retention, you’ll leave before me.

“Because for me, I don’t wait to be sacked, the moment I’m not performing, I’ll leave honourably.

“But before I leave, I’ll explore every opportunity to ensure I deliver, because this is not personal; this is national and national interest must prevail.

“So all the players in the power sector must support my vision, so that I can support Mr. President’s vision.”

2013 Power sector privatisation ‘a regrettable decision’ -Adelabu

The Minister strongly asserted that the privatisation of the power sector in 2013 was a regrettable decision, underscoring that a more effective approach would have been commercialisation.

He, however, noted the Federal Government of Nigeria, despite holding a 40 percent stake in these power entities, retains the option to assume control of the power distribution companies.

According to the Minister,  a potential reassessment of the territorial coverage of these electricity Distribution Companies is being considered.

He stated that several of them currently, manage vast areas, and have failed to meet performance expectations in the all-important sector.

The Minister as well disclosed that upon assuming office, he observed that the licences granted to privatised power firms were initially set to expire between 2013 and 2023.

However, he has initiated an investigation into an apparent extension of these licences for five additional years, which transpired under a previous administration, stated he.

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