President Bola Tinubu has put a stop to the planned increase in electricity tariffs and has demanded that subsidies be provided for power consumption nationwide, according to the Minister of Power, Adebayo Adelabu. Adelabu also announced that the federal government would investigate the legality of the five-year license extension given to privatized power distribution and generation companies, as their operating licenses were set to expire on October 31, 2023.
Speaking at a press briefing in Abuja, Adelabu emphasized that he would dismiss any chief executive of agencies under the power ministry who failed to perform their duties effectively and negatively impacted his own job as minister.
Regarding the demand for a cost-reflective tariff, which would result in increased electricity prices, Adelabu explained, “The power sector is an industry that is very sensitive to any leader. You cannot jump overnight and implement the cost-reflective tariff. I can tell you that till today the government still subsidizes power. Tariff should have been raised months back, but Mr. President said until we are able to achieve regular and incremental power supply, we can’t touch the tariff.”
He further stated that the large gap between the cost-reflective tariff and the allowed tariff is being handled by the government as subsidy, which has a negative impact on the liquidity of the system and restricts investments. Adelabu emphasized that the President wants to avoid placing additional burdens on Nigerians, especially during a time of economic hardship caused by factors such as the removal of fuel subsidies, high exchange rates, inflation, and other challenges.
Adelabu clarified that while the tariff increase will eventually be implemented, it will only be done after thorough sensitization and communication with the public, and there must be a consistent and gradual power supply. He highlighted the importance of power supply, stating that Nigeria’s current power generation capacity of around 4,000 megawatts is inadequate and unacceptable, and efforts are being made to increase it.
The minister also echoed the President’s call for performance and accountability in the power sector, stating that any senior officials who fail to deliver will be dismissed. Adelabu admitted that the privatization of the power sector in 2013 was a mistake and suggested that commercialization would have been a better approach. He added that the government might potentially reassume control over the power distribution companies despite already owning a 40% stake in these firms. The territorial coverage of the distribution companies might also be reviewed, as many of them have been handling large territories but have failed to meet expectations.
Adelabu mentioned that when he took office, he discovered that the licenses of the privatized power firms were originally valid from 2013 to 2023, but it was later extended by five years. He revealed that an investigation is underway to determine the legality and contractual correctness of this extension. Additionally, the minister confirmed that Nigeria has not yet begun supplying power to Niger Republic and is monitoring the situation in the affected country.
According to data from the National Bureau of Statistics, the number of electricity customers in Nigeria slightly increased on a quarter-on-quarter basis in Q2 2022. However, it declined on a year-on-year basis compared to the same periods in 2021. The number of metered customers also saw a slight increase during the same period. Electricity supply, however, decreased in Q1 and Q2 2022 compared to the previous year. The revenue generated by the distribution companies also fell in Q2 2022 compared to Q1 2022, but increased on a year-on-year basis.