The Minister of Power, Mr. Adebayo Adelabu, announced that the introduction of band A with a higher tariff has significantly reduced Nigeria’s electricity subsidy from approximately N3 trillion to N1 trillion.
He made this disclosure during a public hearing on electricity tariffs held in Abuja on Tuesday.
The hearing was organized by the House of Representatives Joint Committee on Power, Commerce, National Planning, and Delegated Legislation.
Adelabu explained that without the increase in electricity tariffs, the expected subsidy would have escalated to nearly N3 trillion, a burden the Federal Government could not sustain.
“The Federal Government cannot afford to pay N3 trillion in subsidies,” Adelabu stated.
Instead of accumulating debt, the ministry implemented a model where customers on band A pay higher tariffs, thereby subsidizing electricity costs.
According to Adelabu, this measure compensates for the expenses consumers incur on fuel and diesel.
“What consumers spend now is cheaper compared to fuel and diesel, even with the increase in electricity tariff,” he noted.
“We are still about the cheapest, even in sub-Saharan Africa, despite the tariff.
Our neighboring countries pay higher.
So the price isn’t comparable.”
Adelabu emphasized that band A is almost 50 percent cheaper than generating power individually with fuel and diesel.
“It is cheaper for any business to pay for a grid connection than to individually generate power,” he added.
The minister assured that President Bola Tinubu’s administration is committed to improving the situation for Nigerians, stating, “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.”
Adelabu clarified that the increase in tariffs aims to make life more affordable for people, rather than imposing hardships.
Deputy Speaker of the House of Representatives, Rep. Benjamin Kalu, highlighted the widespread discontent triggered by the Nigeria Electricity Regulatory Commission’s (NERC) decision to increase electricity tariffs.
He explained that NERC justified the tariff hike as necessary to address the industry’s mounting debt and ensure the power sector’s continued functioning.
However, Kalu acknowledged that the move had not been well-received by the public, with many expressing 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,” he said.
Kalu assured that lawmakers are committed to transforming the power sector into a model of efficiency and sustainability, aligning with 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 added.
