FG, NERC at odds over electricity tariff subsidy for hospitals

The federal government’s announcement of a 50 per cent electricity tariff subsidy for public hospitals has been met with confusion as the Nigerian Electricity Regulatory Commission (NERC) denies receiving any such directive.

Last month, Tunji Alausa, the minister of state for health, announced that President Bola Tinubu had approved a subsidy for healthcare facilities in response to growing calls for government intervention to mitigate the crippling impact of high energy costs on hospital operations.

He said the initiative will support mainly federal teaching hospitals, leaving out private hospitals that have led various advocacy for a special electricity tariff.

However, the NERC told BusinessDay on Wednesday that there is no separate plan to cut electricity tariff for hospitals as suggested by the FG.

“We have not received any communication from the federal government regarding an electricity subsidy for hospitals. We haven’t,” Usman Arabi, NERC, head of public affairs said.

Impact on Public Hospitals

Meanwhile, hospital directors are keenly awaiting the implementation of the subsidy directive as many of them struggle with millions of naira in electricity debt accumulated since the tariff increased by over 300 per cent.

The University College Hospital (UCH) in Ibadan was disconnected from the electricity grid by the Ibadan Electricity Distribution Company (IBEDC) earlier this year due to an unpaid debt of nearly N500 million, disrupting healthcare services for the city’s population of over 3 million.

Since May, the Lagos University Teaching Hospital (LUTH) has been experiencing frequent and unexpected power outages, coupled with a monthly electricity bill of around N280 million, which is 21.7 per cent higher than the total electricity bill of the entire University of Ilorin

John Okeniyi, the chief medical director (CMD) of Obafemi Awolowo University Teaching Hospital Complex (OAUTHC) lauded the initiative, noting that Alausa had confirmed it at a recent meeting of the committee of CMDs in Abuja.

He believes the subsidy will significantly reduce operational costs for hospitals nationwide, stating, ‘Electricity is crucial for the efficient functioning of OAUTHC and other healthcare institutions across the country.’

Uncertainty Among Hospital Directors

Wasiu Adeyemo, CMD of LUTH said he awaits the electricity bill for September to confirm if the subsidy will be reflected or not.

“We have not received the modus operandi but I’m aware that the government is serious about it and hoping that it gets it done. The government will have to talk to the NERC and pass the message across to us. It is not something difficult,” Adeyemo said.

In response to the question of whether patients can expect lower treatment costs if the subsidy is implemented, Adeyemo stated that the hospital has not increased its charges despite the rising inflation.

Adetokunbo Fabamwo, CMD of Lagos State University Teaching Hospital told BusinessDay that the subsidy does not extend to the hospital as it is supplied power by the independent power project (IPP) run by the state government.

However, the IPP developed issues many months ago, forcing the hospital to rely on electricity generators for power.

“We have been spending a lot of money to purchase diesel because we cannot shut down. We supply power for an average of 16 hours a day. But all the critical service areas get 24-hour light, one way or the other. All the emergency units, theater, labor ward, neonatal unit, ICU, and intensive care unit, get 24-hour power. But for the wards and clinics, we ration power just so that generators can rest,” Fabamwo told BusinessDay.

Apart from implementation, another challenge is the limitation of the subsidy benefit to just public hospitals.

Private hospitals are hurt about being left out despite engaging the Nigerian Electricity Regulation Commission for more than two years without yielding results.

Exclusion of Private Hospitals and Advocacy Efforts

The Association of Nigeria Private Medical Practitioners (ANPMP) at its 46th Annual General Meeting and International Scientific Conference had demanded the establishment of a ‘Special Health Sector Electricity Tariff’ to serve as a subsidy for the critical sector.

Kay Adesola, ANPMP president told BusinessDay that it has had two separate meetings with Muhammad Ali Pate, the minister of health and social welfare and was aiming to meet the minister of power.

But when the directive on subsidy was unveiled, private hospitals were omitted despite providing 70 per cent of health services across the country, he said.

The association is however demanding a 75 to 100 percent electricity subsidy arguing that energy bills mop up more than 40 percent of hospitals’ overhead costs in Nigeria.

Due to spiking costs of operation, Adesola revealed that an average of five hospitals shut down monthly across the country despite a population with far greater need for more medical facilities and personnel.

The high energy costs coupled with the exorbitant rate of importing drugs, devices, medical consumables, and equipment have made it difficult for those in business to break even without choking patients with high rates.

“If the government is genuine in its quest to provide subsidy for the public, it should also look towards the private sector which covers about 70 per cent of healthcare delivery,” Adesola said.

“The government pays all the bills of public hospitals and still gives them subsidies. Why are we in the private sector not deserving? We have been at this since 2021. Tomorrow, they will tell us to treat for free any patient rushed in for an emergency. We have to face reality.”