Minister of Power, Mr Adebayo Adelabu, stated that the introduction of band A with a higher tariff has reduced the electricity subsidy to N1 trillion from about N3 trillion.
The minister made this remark at the public hearing on electricity tariffs in Abuja on Tuesday.
The hearing was organised by the House of Representatives Joint Committee on Power, Commerce, National Planning, and Delegated Legislation.
Adelabu explained that without an increase in electricity tariffs, the expected subsidy would have been close to N3 trillion.
He stressed that the Federal Government could not afford to pay N3 trillion in subsidies.
The minister noted that instead of piling up debt for the government, the ministry devised a model for customers to pay for subsidies on band A.
According to him, this model will compensate for the fuel and diesel that consumers are using.
He pointed out that what consumers spend now is cheaper compared to fuel and diesel, even with the increase in electricity tariffs.
“We are still about the cheapest, even in sub-Saharan Africa, despite the tariff. Our neighbouring countries pay higher. So the price isn’t comparable.
“Band A is cheaper compared to other sources of generating power. It is almost 50 per cent cheaper to connect to band A of the national grid than to run on fuel and diesel.
“So when we complain about the higher tariff, it is cheaper for any business to pay for a grid connection than to individually generate power,” he said.
He assured that President Bola Tinubu’s administration means well for Nigerians and would not aggravate an already bad situation in the country.
“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,” he said.
The minister explained that the increase in tariffs was not targeted at making life difficult for Nigerians but at making life affordable for the people.
Rep. Benjamin Kalu, Deputy Speaker of the House of Representatives, noted that the decision by the Nigeria Electricity Regulatory Commission (NERC) to increase electricity tariffs had sparked widespread discontent.
He said the justification provided for this tariff hike, as outlined by NERC, was to address the industry’s mounting debt and ensure the continued functioning of the power sector.
Kalu acknowledged that the move had not been well-received by the citizenry and that the fears expressed by many were valid.
He added that such a sharp increase in electricity tariffs would only exacerbate the economic hardships already faced by our people.
“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,” he said.
Kalu affirmed that lawmakers are committed to working closely with the executive to transform the power sector into a model of efficiency and sustainability as outlined in the legislative agenda.
“We are dedicated to providing legislative support to the efforts of the Tinubu administration in reforming the power sector by addressing all legal and legislative impediments,” he said.
