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Electricity Tariff Hike: Tinubu Blocks Move, Insist On Subsidy

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President Bola Tinubu has disagreed with the implementation of a hike in electricity tariff, insisting that subsidy be paid on power consumed nationwide until there is desperate need to do so. Minister for power Adebayo Adelabu stated this yesterday that the Federal Government would investigate the legality of the five-year licence extension given to privatised power distribution and generation companies, stressing that the operating licences of the firms seemed to have expired on October 31, 2023.

Adelabu stated this during a press briefing in Abuja saying that this administration would not hesitate to sack non-performing chief executive in agencies under the power ministry, if their non-performance would make him lose his job as minister. 

Speaking on the call for a cost reflective tariff, which would lead to a hike in the amount payable for power, Adelabu said, “The power sector is an industry that is very sensitive to any leader. 

The Minister said, “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.” 

He noted that the non-implementation of this was actually causing liquidity crisis in the sector, but nevertheless, President had refused to welcome any 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. 

According to the minister, 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.” 

But he insisted that tariff would be increase but in appropriate time, and that would talk a lot of time until the general public get to know about it and would be tie to regular power supply. 

Adelabu laments that 4,000 megawatts power generation in Nigeria was shameful and unacceptable, noting that it must be increase by all means possible. 

The Minister added that he is not taking any chance as Mr President Message was very clear, that you either perform or get fired, and he ready to extend the manta downwards. 

“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,” Adelabu stated. 

He noted that the privatisation of the power sector from the first place in 2013 was a gross mistake, stressing that commercialisation should have been better. 

The minister said when he resumed office, the licences of the privatised power firms which he saw were for 2013 to 2023, but along the line he got to hear that there was an extension by another five years. 

He said that though the government is investigating, but would sit with the private sector operators to agree on a performance bond which the power firms must meet. 

“what actually matters to us now, but I can tell you that I’ve ordered an investigation into the extension of the licences, (which was) not by this administration. So we want to investigate what truly happened. 

“How legally correct was it, how contractually correct was the extension?” Adelabu stated. 

When asked on Whether Nigeria had started supplying power to Niger Republic, the minister said, “We have not started. We are just messengers, when they ask us to resume, we will resume.” 

He said the president is still monitoring the situation in that country. 

According to statistics from the National Bureau of Statistics, total number of electricity customers in Q1 2022 stood at 10.63 million and 10.81 million in Q2 2022, showing a rise of 1.67 per cent on a quarter-on-quarter basis. 

On a year-on-year basis, customer number in Q1 2022 declined by 1.36 per cent from Q1 2021 (10.78 million), and also fell in Q2 2022 by 2.27 per cent from Q2 2021 (11.06million).