Nigerians are on edge as the federal government, led by President Bola Ahmed Tinubu, contemplates the removal of electricity subsidy in the coming days, despite the citizens grappling with worsening economic hardship.
During a briefing on February 14, 2024, the Minister of Power, Adebayo Adelabu, declared that the government could no longer sustain electricity subsidy, given its mounting indebtedness of N3 trillion.
Adelabu’s statement has stirred anxiety among Nigerians, with many perceiving it as another move to exacerbate the existing challenges posed by the removal of fuel subsidies and the floating of the Naira.
With the cost of living rising, economic hardships intensifying, and inflation reaching an all-time high of 29.90 per cent in January 2024, the removal of electricity subsidies would further compound the difficulties for most Nigerians.
The International Monetary Fund has advocated for Nigeria to cease electricity subsidy, echoing its previous stance on fuel subsidy and Naira floating.
Nigeria now faces a dilemma of choosing between adopting a cost-reflective electricity tariff or maintaining the electricity subsidy regime.
According to the Nigerian Electricity Regulatory Commission, the country spent N2.8 trillion on electricity subsidies from 2015 to 2022. In 2023 alone, N600 billion was allocated to electricity subsidies due to foreign exchange pressures and inflation, pushing cost-reflective tariffs to N124/kWh.
Despite Nigerians experiencing at least five electricity tariff hikes from January 2020 to January 2023, reaching 94 per cent of cost recovery, the power sector continues to underperform, facing challenges such as poor supply, outages, and dilapidated distribution infrastructure.
Nigeria’s power sector growth has remained stagnant, with a low power generation, transmission, and distribution capacity of about 5,625MW, 8,500MW, and 8,425MW, respectively, despite having a population exceeding 200 million.
In recent weeks, nationwide electricity supply has dropped, leading to power shedding or rationing, attributed by the government to gas constraints.
Amidst conflicting statements, Bolaji Tunji, the special adviser for strategic communication and media relations to the Minister of Power, clarified that Adelabu did not explicitly mention the removal of the electricity subsidy. Tunji emphasized that the Minister proposed considering various solutions to the ongoing challenges in the power sector, leaving the decision on whether to continue electricity subsidy or adopt a cost-reflective tariff to President Bola Ahmed Tinubu and Nigerians.
“What the Minister said was to put all solutions on the table and for the President and Nigerians to decide whether to continue the fuel subsidy or go for cost reflective tariff.
“The President and the Nigerian people can decide on removing electricity subsidies. The Minister is saying that with the electricity subsidy, there is no problem, but it must be cash-backed, and if the Government can’t continue, let Nigerians decide.
“Let’s decide we cannot continue the electricity subsidy; let’s have a cost-reflective tariff. The Minister never said the Government wanted to remove electricity subsidies. The Government is not planning anything of such.
“You will notice that the Minister said the DisCos must review their performance or else lose their license.
“The Federal Government of Nigeria still sees the power sector as a social service.
“The Federal Government must decide whether to discontinue the electricity subsidy or go on cost-reflective tariffs. It is the Government that will decide that. If the money is provided today to pay all the debts, then we will continue”, he said.
The Lead Director of the Centre for Social Justice, Eze Onyekpere, said the Government should not contemplate electricity subsidy removal because it will worsen the hardship Nigerians are grappling with.
He warned that the Government should not tempt the resolve of Nigerians by worsening the existing hardship.
According to him, DisCos, GenCos and other service providers within the Nigerian Electricity Supply Industry should consider improving their quality of services.
“The electricity tariff we are paying today has increased at least four times in the last few years. The subsidy doesn’t mean that providers of electricity services, GenCos and DisCos, are not getting their money.
“This doesn’t mean that service quality will improve even if the tariff is doubled. There is no basis for any expectation of improved service if the tariff is increased. What should be discussed is improving quality service.
“I run my office and home basically on generators. There is no need for anybody to be sounding nice to the government because they are putting us in tremendous pain.
“If the Minister doesn’t understand what to do, he should resign. Nigerians are hungry, there is no food, and all they are thinking is to increase the pain. The message to him is that Nigerians would revolt against the government if the electricity subsidy is removed.
“The Government should not contemplate removing electricity subsidies. We are talking of hunger, hike in food prices”, he Shared.
On his part, the President of the Nigerian Consumer Protection Network, Kunle Olubiyo said there is apprehension among electricity consumers that the government might freeze the power subsidy on March 1, 2024, which means an electricity tariff hike.
According to him, it would be unwise for the government to add to Nigerians’ existing hardship, occasioned by fuel subsidy removal and Naira floating.
He noted that the removal of electricity subsidies may lead to unrest among Nigerians, undermining democracy.
Olubiyo warned the government not to push Nigerians to the wall by providing necessary tax concessions and other measures to cushion the impact of the worsening hardship.
He stated that everything happening in Nigeria right now was an indicator of what led to the infamous Arab Spring.
Olubiyo shared that, “by March 1, the Federal Government might freeze the electricity tariff, which means there may be a tariff hike on March 1, 2024.
“But our major concern is that the major factors militating against efficiency in services, like the gaps in infrastructure, operational efficiency, and efficient power delivery to customers’ satisfaction, will not come immediately.
“We equally believe in the issue of meters. As I am speaking to you, there is no clear-cut metering programme for customers. You are also aware that the price of meters may increase by 50 to 100 per cent. So, if the government releases the cylinders simultaneously, it will be a disaster for Nigerians.
“Nigerians are still feeling the pains of fuel subsidy removal and Naira floating. The government’s subsidy on fuel is even higher than what was paid before May 29, 2024. The government is in a serious dilemma, and there are some give and take. The government must be ready to make some tax concessions.
“The government must create a cushion effect because nothing makes Nigeria’s environment different from the Arab Spring. All the indicators that resulted in the Arab Spring are happening in Nigeria.
“It will be better if the government pulls out from the transmission of the electricity market. Some vouchers handed to the government are not properly scrutinized because they believe that the government will pay.
“At the end of the day, we should not undermine the institution and stability of democracy because ‘we want to act as if we no dey fear’.
“There are reactions from the public the government won’t be able to manage. From a security point of view, the government should not over-drag economic policies that will undermine democracy. There must be a social balance.
“The government should not fire the cylinder from all sides, which will cause Nigerians to hit the street. Government must give some concessions”, he said.
