Business
Senate rejects removal of electricity subsidy
The Senate has opposed the Ministry of Power’s intentions to raise electricity tariffs.
Given the country’s current economic situation, the Senate also rejected efforts to eliminate electricity subsidy.
The Senate then urged the federal government to abandon the notion of increasing electricity tariffs.
The upper chamber also asked its Committee on Power to investigate the N2 trillion subsidy requirement claimed by the Minister of Power, Adebayo Adelabu, as well as other sector debts, and to assess the country’s metering situation.
The Senate’s resolution came after it considered and approved a motion by Senator Aminu Abbas (PDP), Adamawa Central) during plenary about the necessity to keep the county’s electricity subsidy in place for the foreseeable future.
Adelabu announced last week at a news conference in Abuja that Nigeria’s present electricity subsidy was unlikely to be sustained.
He said that the country’s power industry is now in debt to electricity and gas corporations, totaling more than N3 trillion.
He said, “Today, we owe a total of N1.3tn to the power-generating companies, out of which 60 percent is owed to gas suppliers. Today we have a legacy debt, before 2014, to the gas companies of $1.3 billion; at today’s rate, that is close to N2 trillion.”
According to reports, the spokesperson for the Senate, Yemi Adraamodu, said it would not allow any hike in electricity tariffs that may add to the woes of Nigerians.
Abbas, in his lead debate, said the “Senate notes with greatest dismay the plan to increase the electricity tariff by the relevant statutory authority in gross disregard of increased economic challenges with attendant widespread poverty and high cost of living.”
He added, “The Senate may note that the Minister of Power was reported as saying that the nation must begin to move towards a cost-effective tariff model, as the country is currently indebted to the tune of N1.3tn to generating companies (GenCos) and $1.3bn to gas companies.
“According to him, out of the over N2 trillion needed for subsidies, only N450 billion was budgeted this year.
“The same electricity businesses are collecting money from customers for services not rendered when they have not added anything to the equipment; they inherited it from PHCN.
“Communities buy transformers to replace damaged ones in addition to overburdening bills and arbitrary estimates for unmetered customers.”
Further, Abbas stated, “Take cognizance that in a country where a greater population lives below the poverty line, with stagnant wages, rising inflation, and depreciating currency, the prospect of a higher electricity bill is unattainable.
“The issue of arbitrary energy charges on unmetered customers has become worrisome given the February 2024 report of the Nigerian Electricity Regulatory Commission on the noncompliance with energy billing caps by DisCos and the penalty of N10.5bn imposed on the distribution companies that overbilled their unmetered customers.
“Aware that in 2018, the then Minister of Power, Works, and Housing directed the Nigerian Electricity Regulatory Commission to issue a regulation that facilitates the signing of meter agreements between the Federal Ministry of Power, Works, and Housing, Ziglaks Company, and other meter asset providers to address the metering gaps in the power supply industry,”
He noted, “Further aware that as far back as 2020, the President then ordered the Nigerian Electricity Regulatory Commission to commence mass pre-paid metering to end estimated billing, and that funds were released to that effect.”
He remembered that the Senate, via a motion, requested that the FG and NERC not raise energy tariffs for customers and inhabitants of this country at this time.
Abbas further noted, “Regret that in addition to the high cost of living being experienced in the country, the unmetered customers who are owners of small and medium enterprises are adversely impacted by this level of exorbitant electricity charges and, by implication, have their businesses affected.
“While the prospect of the new Electricity Act, 2023, ensuring accurate electricity charges, will be negated if DisCos are not investigated to ascertain the current statistical data on unmetered customers, poor provision of electricity service despite exorbitant tariffs, and the regulatory role of NERC, which leaves much to be desired,”
Senator Aminu Tambuwal (PDP), Sokoto South) said it was unusual for the government to “consider hiking electricity tariffs in the face of hardship,” emphasizing that “such action should not even be contemplated in the first place.”
Similarly, Senator Orji Kalu (APC), Abia North) pointed out that even advanced economies subsidize power.
He queried, “Why should people be paying for what they did not use? Our focus should be on transmission and distribution.”
