The Nigerian Electricity Regulatory Commission (NERC) announced on Wednesday that the Federal Government has removed electricity subsidy. FG had spent about N600 billion during some periods, subsidizing power.
According to the Chairman of NERC, Sanusi Garba, the decision to stop the subsidy was a policy issue of the Federal Government aimed at balancing the interests of consumers and investors. Garba explained that running the electricity market on life support was unsustainable, and reducing subsidy was necessary for investors to get their returns on investment.
He said “the role of the commission is to make a determination of the rates that consumers should pay. So we strike a balance between consumers and investors. Now subsidy is a policy issue determined by the government.”
Garba revealed that subsidies had gradually decreased over the past few years, from as high as N600 billion annually to about N30 billion this year. He clarified that the adjustment in electricity tariffs made in February 2022 was based on economic fundamentals considered by the commission, including foreign exchange components and inflation.
“The current energy crisis confronting some key sectors of the economy also contributed to the problems we are facing now in the power sector,” said the Federal Ministry of Power in a statement issued in Abuja.
Read Also: Power Generation Drops By 1,119.6MW, Sector’s Growth Falls By 45%
On concerns about the rise in electricity tariffs, the NERC boss stated that the adjustment was made in February this year following some economic fundamentals considered by the commission. He stated, “What happened on February 1, 2022, is a minor review of tariff. It is very clear on our website that every six months we will adjust rates to take care of the foreign exchange component of cost and also inflation.”
The tariff adjustment, according to Garba, was a routine review scheduled every six months to ensure that costs were adequately covered. He emphasized that distribution companies were responsible for informing customers about these changes.
Regarding recent blackouts and grid collapses, Garba attributed the instability to several factors, including vandalism of gas pipelines and routine maintenance of power plants.
The NERC chairman and the Ministry of Power underscored the need for ongoing efforts to address these issues and ensure a stable and reliable power supply in Nigeria.
Source: PunchNG