The Nigerian Electricity Regulatory Commission (NERC) has called for the removal of electricity tariff subsidy, saying the amount spent can be channelled into other sectors of the economy.
NERC Vice Chairman, Sanusi Garba who advocated for service reflective tariffs so that people will pay for the electricity they consume, revealed that the Federal Government spent about N540 billion subsidising electricity in 2019.
The service reflective tariff was supposed to take effect on September 1, 2020, before it was suspended for 2 weeks following the agreement between the Federal Government and Labour unions.
Garba stressed that it is necessary for electricity consumers to make the right payments, instead of the government paying subsidy on electricity every year.
He noted that the tariff review has been shifted two times and such is not in the best interest of the country.
“The time of the review has actually been shifted twice, in consideration of the exigencies that obstructed everybody, particularly the COVID-19 pandemic and other situations.
“But you cannot continue to defer the review indefinitely because you should look at electricity supply as a value chain. Generation companies are spending money to produce electricity and TCN (Transmission Company of Nigeria) is transmitting that electricity to the distribution companies.
“If you continue to suppress prices, somebody has to take a hard cut in terms of cost; somebody’s revenue will not be covered.
“Now what has been happening is that over the last few years, the government had been subsidising rates paid by end-users significantly. In 2019, the subsidy was something in the region of N540bn that has been paid,” he told Punch Newspaper.
Garba stressed that subsidising electricity is not sustainable, urging Nigerians to understand why it is important to put an end to it and review tariffs.
He said, “If you continue to defer the rates review, unless the government has the resources to fill in the gap, the implication is that you will see service plummeting significantly.
“This is because at the end of the day, the generators will not be paid. And if the generation companies are not paid, it means that they will not be able to pay for gas. And so the 3,000 megawatts, 4,000MW and occasionally 5,000MW that we are getting now will significantly come down.”