Adebayo Adelabu, Minister of Power, has said that the revised electricity tariff for Band A customers could decrease if the Naira continues to strengthen against the Dollar in the foreign exchange market, indicating that the rates are not fixed.
The minister made this statement during an interview on Channels TV on Thursday.
He stated that the tariff is flexible, as it reflects the current economic conditions in the country, especially the exchange rate between the Naira and the Dollar in the FX market.
▪ “The tariff is flexible, and I can tell you that even if naira gains more and the exchange rate comes down below N1,000, it must positively affect the tariff and the tariff even for the Band A will come to down below the N225 kilowatt per hour that we are currently charging.
▪ “There are variable factors that go into composition of the tariff, and we are not closing our eyes to it. We are publishing it, we are transparent, we are talking to Nigerians and all the power sector stakeholders. This administration is very serious, and we are committed to transforming the sector,” he said.
Adelabu also noted that the Federal Government is still paying subsidies on electricity despite the recent hike in tariff paid by Band A customers.
Adelabu emphasized that under the Electricity Act 2023, there are provisions that allow for the tariff to be reviewed twice each year.
Addressing allegations that the Federal Government eliminated electricity subsidies in 2022, Adelabu referenced several factors such as the rising Dollar value, increasing gas prices and the costs associated with power plant operations as well as transmission and distribution infrastructure over the past two years.
▪ “If we have been paying the tariff at the same level in the last two years, it logically means that someone has been paying the burden of all these increases.
▪ “As it is today, looking at a total production, transmission and distribution cost, the Nigerian Government is bearing 67% percent of that cost before the increase in tariff for Band A customers. But when you look at the generation cost, the Nigerian Government is paying 90% but in terms of total subsidy, it is about 67% of subsidy on the tariff.
▪ “Last year, it was about N720 billion which was not fully funded. We have about N305 billion carried into this year. If we retain tariff at the current level, the Nigerian Government will be needing about N2.9 trillion to subsidise electricity but with the increase for Band A customers, we are going to have a reduction of about N1.1 trillion So, we are looking at about N1.8 trillion in subsidy,” he said.