May 25, 2024

Nigerian Government pays N120bn electricity subsidy for citizens on bands C, D, E in 2022

Oredola Adeola

The Nigerian Government has slowed down on the plan to end the N30 billion monthly electricity subsidy, having spent an estimated N120 billion to service the bills of electricity customers on tariff bands C, D, and E in 2022.

Ahmad Zakari, Special Adviser to President Buhari on Power and Infrastructure, revealed this while speaking on Channels Television’s programme “Sunrise” on Wednesday.

EnergyDay’s check showed that customers on Band C receive a minimum of 12 hours per day, Band D receive 8 hours per day and Band E enjoy a minimum of 4 hours per day.

Mrs. Zainab Ahmed, Minister of Finance, Budgets and National Planning, had in March 2022, during the International Monetary Fund (IMF), said that the government has quietly implemented subsidy removal in the electricity sector.

She claimed that the country no longer pays subsidy in the electricity sector, revealing that the action was taken over time. She also said that the Government had carefully adjusted the prices at some levels while holding the lower levels down.

Vice President Yemi Osinbajo, on different occasions, made a statement supporting the subsidy removal and said that the government is committed to allowing the electricity sector to generate its revenue from the market.

“It was anticipated that all electricity market revenues will be obtained from the market with limited subsidy from 2022 as reforms in metering and efficiency with the DISCOs continue to improve,” Osinbajo said.

Confirming the subsidy payment, Zakari said, “Buhari’s administration subsidizes the electricity consumption of Nigerians within the C, D, and E tariff bands, who are less affluent. We will continue to use limited resources available to subsidize the electricity consumption of citizens who need subsidy.

“However, we have realised that there are some people who have politically weaponised the electricity tariff increase to pitch the people against the government.

“The N120 billion was used to service the subsidy of those citizens on lower bands. This is a targeted subsidy which is better than giving subsidy to affluent people in areas like Maitama in Abuja and Victoria Island in Lagos.

A further check by EnergyDay, based on the figure obtained from National Electricity Regulatory Commission (NERC) showed that the Nigerian Government through the Minimum Remittance Order (MRO) derived from the allowed tariff to all the electricity Distribution Companies (DisCos) was responsible for the payment of ₦35.27 billion in the first quarter, 2022, (Q1,22) and another ₦35.02 billion electricity subsidy of energy consumers.

METERING

Zakari said that during the first phase of NMMP, about one million meters were distributed, while the process for installation of another four million pre-paid meters is ongoing.

He noted that over 40 local manufacturers of meters are working on the four million that would be distributed during Phase 1 of the NMMP, adding that this has also created job opportunities for thousands of Nigerians working in the facilities.

He said, “The Nigerian Electricity Management Service Agency(NEMSA), has certified 20 new local manufacturing companies to assembly the meters locally.”

The Special Adviser also noted that the world bank has also provided another loan facility to finance 1.25 million prepaid meters. He further disclosed that the Buhari administration inherited about 9.8 million meters, adding that the figure has been reduced to around 6 million unmetered customers through the impact of the NMMP.

He noted that the power sector was comatose when the Buhari administration came on board and that subsidies were ballooning to about N582 billion.

RURAL ELECTRIFICATION EXPANSION PROGRAMME

Zakari said, “The rural electrification programme was abandoned for many years, despite the Act supporting its establishment and financing which was neglected for twelve years. The Buhari administration in 2017, acted the act and provided funds for its operations.

“So far $ 550 million financial facility has been released to the Rural Electrification Agency(REA) for its expansion programmes. More than 100 mini grids including thousands of solar home systems(SHS) have taken off and distributed across unserved and under-served communities.

RESTRUCTURING OF DISCOS

He said, ‘‘We equally inherited power sector privatisation problems, especially when the DisCos, as well as other assets, were either sold to people who do not have the prerequisite technical knowledge and expertise to manage the assets including contractors who couldn’t execute projects.

“In December, we recorded the largest collections of N80 billion in the history of the Nigerian power sector. So far, eight out of the 11 DisCos have been restructured and bringing life to their activities within the market.

“For instance, which is one of the restructured DisCos paid N1.8bn monthly out of its invoices. Yola DisCo moved from paying N600 million monthly to about 1.3bn.

We are passing on power sector that is economically stable and sustainable to the next administration.