• Friday, April 19, 2024
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FG to end electricity subsidy by January 2022

Of state participation in the new Nigerian electricity markets- the how, why and what

The Federal Government will end all subsidies and financial intervention in the electricity market by January 2022 paving the way for customers to pay what the government calls full commercial price for power.

Ahmed Zakari, Special Adviser to the President on Infrastructure speaking at a stakeholders engagement with operators and the regulator on Friday, in Lagos said the Federal government intends to reduce its interventions in the Power Sector and thus allowing market participants determine the course of action.

“We must move to a market where a person that buys power, pays for power. A Disco that buys power, pays for that power from the Genco that gives power. It’s very simple. It’s called commerce. Having middle structures in the way that promotes a lack of accountability does not work. And this administration is committed to making this a level playing field,” he said.

However, there are obstacles on the way. This includes opposition from labor groups and many citizens who oppose raising tariffs without the provision of electricity meters.

Read Also: Electricity subsidy benefits rich Nigerians more – World Bank study

One of the participants at that public hearing and Executive Director, Center for Transparency & Accountability in the Energy Sector, Barrister Abel Godson, stated that, “with the deteriorating nature of electricity supply in the country, coupled with a deteriorating and ageing infrastructure within the electricity network, government’s pre-occupation should be about stabilizing the market, and not tariff hike.”

The Federal Government and Labour had gone into extensive discussions prior to the implementation of the Service Based Tarrif in November 2020, where the electricity regulator (NERC) had promised improvement in service delivery to Nigerians.

Zakari also said the highest peak generation of electricity for the month of September was 4694mw including electricity exports, what was available for Nigerians in-country came down to 3863mw, this is as opposed to the 30,000mw demand for electricity.

This means that the country is providing roughly 11 percent of the citizens’ demand for electricity despite the huge government interventions in the power sector.

Within the past two years, the Federal Government has committed over N1.3trillion as intervention funding in the power sector.

At the NERC stakeholder’s forum, concerns were raised about the power sector moving backwards rather than forging ahead.

There seems to be too many policy summersault, the Presidency spokesman at the forum (Mr. Zakari) also mentioned that Nigeria has one of the poorest supplies of electricity despite the power sector contributing 78 percent to GDP growth for Q2 2021.