Minister of Power, Mr Adebayo Adelabu, says introduction of Band A with a higher tariff has reduced electricity subsidy to N1 trillion from approximately N3 trillion.
Adelabu, who spoke at a public hearing on electricity tariffs organised by the House of Representatives Joint Committee on Power, Commerce, National Planning, and Delegated Legislation in Abuja on Tuesday, noted the financial constraints confronting the Federal Government.
He explained that without an increase in electricity tariffs, the subsidy would have surged to nearly N3 trillion, an amount government can’t afford.
To prevent accumulating further debt, the ministry implemented a model where customers in Band A would pay higher tariffs to offset the subsidies.
The Minister stressed that even with the increased tariffs, the cost for consumers remains lower compared to the expenses incurred from using fuel and diesel.
Adelabu said, “We are still about the cheapest, even in sub-Saharan Africa, despite the tariff. Our neighbouring countries pay higher.
“So the price isn’t comparable. Band A is cheaper compared to other sources of generating power. It is almost 50 per cent cheaper to connect to Band A of the national grid than to run on fuel and diesel.
“So when we complain about the higher tariff, it is cheaper for any business to pay for a grid connection than to individually generate power.”
He assured that President Bola Tinubu’s administration aims to improve the situation for Nigerians.
“We are out to make things better for Nigeria and to create industrial development through our local manufacturing, and energy is needed to do this,” he said.
The Minister reiterated that the increase in tariffs is intended to make life more affordable, not more difficult.
Deputy Speaker of the House of Representatives, Hon Benjamin Kalu, acknowledged that the decision by the Nigeria Electricity Regulatory Commission to increase tariffs has sparked widespread dissatisfaction.
Kalu noted that NERC justified the hike as a necessary step to address the industry’s mounting debt and ensure the power sector’s continued functionality.
However, he recognised the public’s concerns, stating, “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 emphasised the commitment of lawmakers to collaborate with the executive branch to reform the power sector, ensuring efficiency and sustainability as outlined in the legislative agenda.
“We are dedicated to providing legislative support to the efforts of the Tinubu administration in reforming the power sector by addressing all legal and legislative impediments,” he said.
