Bola Tinubu- led government has unveiled plans to phase out electricity subsidies, opting for a gradual tariff increase to alleviate the financial strain on government expenditures.
Adebayo Adelabu, the Minister of Power, disclosed this development during his recent visit to the headquarters of the Ibadan Electricity Distribution Company (IBEDC).
He said, “As it is today, the Federal Government still subsidises electricity because the current tariff DISCOs are allowed to charge is not cost-reflective.
“This is why the Federal Government spent close to N700 billion in 2023 to subsidise electricity. If tariffs are left at this current rate, it is projected that the government will spend about N1.7 trillion to subsidise electricity. The FG cannot afford that.”
“There must be an upward review of the electricity tariff in order to reduce the amount of subsidy required. If we make the tariff 100 per cent cost-reflective, the burden will be too much on our people.
“We don’t want that. To reduce the burden on our people, it is only a fraction of the tariff review that will be reflected.”
To address this, the minister proposed a gradual tariff hike, emphasizing that a 100 percent cost-reflective tariff would impose an unbearable burden on the populace.
He outlined plans for awareness campaigns and advocacy preceding the tariff reassessment, clarifying that the adjustment would follow a graduated approach, with the affluent facing a higher increase and the less privileged experiencing a reduced impact.
Adelabu stressed the necessity of improved power supply as a precondition for the tariff review. He linked his visit to the IBEDC headquarters to the broader goal of assessing and evaluating electricity infrastructure nationwide.
The minister highlighted previous tours of key transmission facilities, including the Ayede 330/132KV transmission substation in Ibadan, and announced plans to inaugurate solar-powered mini-grids in specific local government areas under the Rural Electrification Agency (REA).
During the visit, Adelabu underscored the importance of collective efforts from government and private sector stakeholders to enhance the electricity sector’s performance. He referenced President Bola Tinubu’s commitment to a stable power supply during the election campaign, emphasizing that reliable electricity is crucial for economic growth and national development.
Adelabu also addressed infrastructure upgrades, mentioning the possibility of upgrading the Ayede substation established in 1978 and establishing new substations in Ibadan to reduce existing loads. In response, Kingsley Achife, the Chief Executive Officer of IBEDC, acknowledged the minister’s visit and advocated for a correction in the electricity tariff.