The Minister of Power Adebayo Adelabu has defended the Federal Government of Nigeria’s decision to increase the electricity tariff for a section of customers.
The Federal Government had earlier this year, implemented a controversial hike in electricity tariffs for Band A users in a bid to address Nigeria’s escalating electricity subsidy burden. The move, aimed at reducing the subsidy from approximately N3 trillion to N1 trillion, has sparked significant backlash from Nigerians.
During a public hearing organized by the House of Representatives Joint Committee on Power, Commerce, National Planning, and Delegated Legislation, Adelabu defended the tariff increase. He highlighted the need for the hike, arguing that without it, the government would be unable to sustain the substantial subsidy costs.
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The minister stated that the new tariff regime still positions Nigeria as one of the countries with the cheapest electricity rates in sub-Saharan Africa.
“We are still about the cheapest, even in sub-Saharan, in spite of the tariff. Our neighboring countries pay higher. So the price isn’t comparable,” he asserted.
He further explained that the cost of electricity remains more affordable than other power sources such as premium motorspirit and diesel.
“Band A is cheaper compared to other sources of generating power. It is almost 50 percent cheaper to connect to Band A of the national grid than to run on fuel and diesel,” he said, arguing that businesses benefit more from grid connections than generating power individually using fuel or diesel.
Despite the government’s justification, the tariff hike has met with widespread resistance due to the heavy financial burden it casts on both individuals and businesses. Deputy Speaker of the House of Representatives, Benjamin Kalu, acknowledged that the public has valid concerns.
“There are genuine concerns that higher utility bills resulting from this tariff hike can have ripple effects on operational costs for businesses, potentially leading to increased prices of goods and services,” Kalu noted.
The public hearing came a day after a Lagos High Court temporarily ordered the Nigerian Electricity Regulatory Commission (NERC) and ten electricity distribution companies (DisCos) not to implement the new tariffs. The court’s decision came after the Manufacturers Association of Nigeria (MAN) filed a suit challenging the tariff hike.
The interim order, granted by Judge Lewis Allagoa, restrains the DisCos and NERC from increasing tariffs or disconnecting power supply until the case is resolved.
“That the order is without prejudice to the obligation of the plaintiff from paying their electricity bill at the old rate,” the court said.
The affected DisCos include Abuja Electricity Distribution Company (AEDC), Ibadan Electricity Distribution Company (IBEDC), Eko Electricity Distribution Company (EKEDC), and several others.
MAN, the applicant in the suit, argued that the tariff hike is unsustainable and detrimental to the economic environment. The court has scheduled further hearings for June 24 to deliberate on the matter.
Economic Hardship Fueling Public Resistance
The increase in electricity tariffs comes at a time when Nigerians are grappling with poor earnings and depleted spending power. The economic hardships have made it difficult for many to afford higher utility bills. Subsidies are said to be one of the few benefits Nigerians receive from the government, as poor leadership has forced citizens to provide basic necessities, such as water, for themselves.
However, Adelabu maintained that the tariff hike is a crucial step for reducing the government’s fiscal burden. He noted that the new rates, effective from April, apply to customers receiving at least 20 hours of electricity daily, who will now pay N225 per kilowatt (kW).
The minister stressed that the government’s financial constraints necessitate the removal of subsidies.
“The federal government could no longer afford to pay subsidies on power, necessitating the tariff hike,” he stated.
The government had in May last year, announced the removal of fuel subsidies.