FG to remove electricity subsidy, plans to save N1.1trn annually

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The Bola Tinubu administration has announced plans to eliminate the country’s current 15% electricity subsidy.

Bayo Onanuga, the Special Adviser to President Tinubu on Information and Strategy, said the move would save the government about N1.1 trillion annually.

He said the administration was committed to allowing an increase in electricity tariffs following its N450 billion budget for energy subsidies in 2024. ⁣

As from April, power distribution companies will be able to raise prices for urban consumers from N68 to N200 per kilowatt per hour.

According to Onanuga, the country last reviewed electricity tariffs in 2020, and the planned increase would enable Discos to recover costs and improve investments.

“The regulator will make any pronouncements based on its discussion with the distribution and generating companies. The presidency cannot say anything at this stage.

“With the huge subsidy burden and high cost of gas, the current electricity tariff is not realistic,” Onanuga told Bloomberg.

He said the tariff hike would affect only 15 percent of consumers, accounting for 40% of electricity consumption. ⁣

He said the federal government would help power-generating companies offset about N1.5 trillion in debts they owe the country’s bulk electricity buyer.

The National Bureau of Statistics released an electricity report on Monday, revealing a surge in revenue to N1.1tn for Nigeria’s electricity distribution companies in 2023. ⁣ This is despite the persistent epileptic power supply nationwide.

Nigeria’s national power grid collapsed 46 times from 2017 to 2023, a report by the International Energy Agency (IEA) revealed. ⁣

The IEA said Nigerians endured more nationwide blackouts in 2023, especially on September 14, when the grid collapsed due to a fire on a major transmission line.

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