The government led by Bola Tinubu has announced intentions to gradually raise tariffs instead of phase out electricity subsidies in order to reduce the financial burden on government spending.
This revelation was revealed by Minister of Power Adebayo Adelabu during a recent visit to the Ibadan Electricity Distribution Company (IBEDC) headquarters.
He said, “As it is today, the Federal Government still subsidises electricity because the current tariff DISCOs are allowed to charge is not cost-reflective.
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“This is why the Federal Government spent close to N700 billion in 2023 to subsidise electricity. If tariffs are left at this current rate, it is projected that the government will spend about N1.7 trillion to subsidise electricity. The FG cannot afford that.”
“There must be an upward review of the electricity tariff in order to reduce the amount of subsidy required. If we make the tariff 100 per cent cost-reflective, the burden will be too much on our people.
“We don’t want that. To reduce the burden on our people, it is only a fraction of the tariff review that will be reflected.”
In response, the minister suggested a phased increase in tariffs, stressing that a price that was 100% cost-reflective would put an intolerable burden on the public.
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Prior to the tariff reevaluation, he presented plans for lobbying and awareness campaigns. He made it clear that the adjustment would be made gradually, with the wealthiest paying a larger rise and the less fortunate bearing a smaller burden.
Adelabu emphasised that the pricing review would not be possible without an improved power supply. He made a connection between the larger objective of analysing and evaluating the country’s electrical infrastructure and his visit to the IBEDC headquarters.
The minister announced plans to launch solar-powered mini-grids in particular local government areas under the Rural Electrification Agency (REA) and emphasised prior visits of significant transmission infrastructure, including the Ayede 330/132KV transmission substation in Ibadan.
Adelabu emphasised during the tour the significance of joint efforts from stakeholders in the public and commercial sectors to improve the performance of the electrical sector. He cited President Bola Tinubu’s pledge to maintain a steady power supply throughout the election campaign, highlighting the significance of dependable electricity for both national progress and economic expansion.
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Adelabu also talked about infrastructure improvements, suggesting that new substations be built in Ibadan to lessen current loads and that the 1978-established Ayede substation be upgraded. IBEDC Chief Executive Officer Kingsley Achife responded by praising the minister’s visit and advocated for a correction in the electricity tariff.
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