Adebayo Adelabu, Nigeria’s Minister of Power, announced that the introduction of Band A with a higher tariff has significantly reduced the nation’s electricity subsidy from approximately N3 trillion to N1 trillion.
Adelabu made this statement during a public hearing on electricity tariffs held in Abuja on Tuesday, organized by the House of Representatives Joint Committee on Power, Commerce, National Planning, and Delegated Legislation.
Adelabu emphasized that without the tariff increase, the government would have faced an unsustainable subsidy bill of nearly N3 trillion.
Highlighting the financial strain, he asserted that the Federal Government could not afford to maintain such high subsidy payments.
To address the issue, the Ministry of Power introduced a model requiring customers to pay for subsidies under Band A. This model, according to Adelabu, compensates for the costs consumers incur using fuel and diesel, and ultimately provides a cheaper alternative.
“We are still about the cheapest, even in sub-Saharan Africa, in spite of the tariff. Our neighboring countries pay higher. So the price isn’t comparable,” said Adelabu.
He further noted that connecting to Band A of the national grid is nearly 50 percent cheaper than generating power individually through fuel and diesel.
Adelabu reassured that President Bola Tinubu’s administration is focused on improving the country’s energy landscape without exacerbating current challenges.
He stated, “We are out to make things better for Nigeria and to create industrial development through our local manufacturing, and energy is needed to do this.”
Despite the government’s rationale, the tariff increase has sparked widespread discontent.
Deputy Speaker of the House of Representatives, Rep. Benjamin Kalu, acknowledged the public’s dissatisfaction and expressed concerns over the economic repercussions of the hike.
“There are genuine concerns that higher utility bills resulting from this tariff hike can have ripple effects on operational costs for businesses, potentially leading to increased prices of goods and services,” Kalu said.
Kalu assured that lawmakers are committed to collaborating with the executive branch to transform Nigeria’s power sector into a model of efficiency and sustainability.
He emphasized the legislative body’s dedication to supporting the Tinubu administration’s reform efforts by addressing legal and legislative barriers.
The hearing underscored the ongoing tension between necessary economic reforms and the immediate financial pressures faced by Nigerian citizens.
As the government navigates these complex issues, the balance between sustainable energy policies and economic relief remains a critical point of focus.