Power Minister Asserts: FG Can No Longer Subsidise Electricity.
In a press conference held in Abuja on Wednesday, the Minister of Power, Adebayo Adelabu, conveyed a crucial message. He emphasized that Nigeria’s current model of subsidising electricity is unsustainable, citing the nation’s significant debt to generating companies (GenCos) and gas companies, amounting to 1.3 trillion naira and 1.3 billion dollars, respectively.
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Electricity subsidy gone?
Adelabu disclosed that while only 450 billion naira was budgeted for subsidy this year, the ministry requires over 2 trillion naira to cover the subsidy. Consequently, the minister declared a shift towards a more cost-effective tariff model.
One notable development is the decision to empower state governments to independently generate power for their states. Adelabu highlighted that this move aims to address the financial strain on the federal government.
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Addressing the recent challenges in the power grid, Adelabu attributed the six collapses between December 2023 and the present to various factors, including gas shortages, aging machines in the grid value chain, low capacity to evacuate generated power, and the destruction of power stations in parts of the North-East geopolitical zone.
Concerning the Transmission Company of Nigeria, Adelabu revealed that over 100 projects remain abandoned due to variations in contract figures caused by forex fluctuations. As a result, the company will refrain from awarding new contracts until ongoing projects are completed.
The 2024 budget allocates over 50 billion naira for constructing mini-grids to supply power to remote areas. Adelabu issued a stern warning to electricity distribution companies (DisCos), stating that non-compliance could lead to the withdrawal of licenses.
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In an effort to enhance security for power infrastructure, the minister disclosed that he has engaged with the National Security Adviser, Nuhu Ribadu.
This announcement signifies a significant policy shift in Nigeria’s power sector, prompting a reevaluation of subsidy practices and the exploration of alternative models for sustainable electricity provision.
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