The federal government, in unveiling its strategic direction for the power sector in the new year, has announced that efforts were ongoing to review the implementation of a cost-reflective tariff.
Adebayo Adelabu, the minister of power, disclosed this in his ‘New Year’ message on Monday.
A cost-reflective tariff reflects the actual cost of supplying electricity. It removes the reliance on government subsidies to cover the variance between the current tariff and the actual cost of supply of electricity.
This is as the federal government paid a total of N375.8 billion as a subsidy for electricity consumed in the country from January to September 2023, following the inability of DisCos to collect the total amount billed to customers in the period.
According to Adelabu, the Tinubu-led administration is focused on enhancing electricity distribution and transmission infrastructure to minimize technical and commercial losses.
“Our primary focus is enhancing distribution and transmission infrastructure to minimize technical and commercial losses. The lack of liquidity continues to be a significant challenge in the electricity market.
“We are currently reviewing the implementation process of a cost-reflective tariff, while the Government will continue to subsidize power supply to those that are vulnerable in our society.”
He stated that closing the meter gap is imperative, and ongoing initiatives, including World Bank programs and the Presidential Metering Initiatives, will gain momentum. He added that the ministry will intervene in distribution infrastructure, supplying transformers to communities without burdening citizens financially.
Adelabu said further that rural electrification would remain a priority, with plans for solar-powered mini/microgrids and street lights while collaborating closely with Distribution Companies and state electricity boards.
He also added that to improve the transmission infrastructure, the government has reactivated the Presidential Power Initiative (Siemens Project) to strengthen the national grid and minimize technical losses. “We will also be implementing the Eastern and Western super grid projects to strengthen the grid and increase electricity supply to demand centres in the country.
“The Transmission Company of Nigeria will be reconstituted in the short term, separating Transmission services from System and Market operations in the first quarter of this year. In the medium to long-term, the Transmission grid will be separated into regional grids to enable effective management.
“Generating at installed capacity is a goal for government-owned plants, while private companies are encouraged to invest further. Off-grid and distributed generation, utilizing renewables, will be a focal point. Solar PV plants, small hydro plants, and wind farms will be strategically deployed.”
On Power theft, the Minister said tackling power theft and vandalism is paramount. “This national responsibility requires joint efforts to protect our assets. The Ministry has informed the NSA of recorded cases, and collective action is essential to eliminate these setbacks.”