Nigeria’s Minister of Electricity, Adebayo Adelabu, announced plans to phase out all electricity subsidies in the country’s move to revitalise the electricity sector.
Energy Afrique had earlier reported that Nigerian Government announced a hike in the electricity tariff for Band A customers.
The Minister, in a press conference, emphasised the government’s intent to eliminate all forms of subsidies in the electricity sector. He highlighted that this reform is crucial for attracting investment and ensuring the sector’s financial viability.
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According to the Minister, the current subsidized rates are unsustainable in the long term, and the shift towards a more investment-friendly environment is imperative.
In the wake of these reforms, the Minister disclosed a new electricity tariff, setting the rate at N225 per kilowatt for consumers under the Band A category.
This adjustment aims to reflect the true cost of electricity production and distribution more accurately. “Considering the substantial subsidy where the government covers 67 percent of electricity production costs, this is a significant strain on our resources,” Minister Adelabu explained, emphasizing the urgency of transitioning towards a self-sustaining model.
Government officials have long argued that the subsidies distorts the market and discourages investment in new power generation and distribution infrastructure, and eliminating the subsidy is expected to allow for a more competitive and efficient electricity market.
