The Nigerian Senate has taken a firm stand against the Ministry of Power’s proposal to increase electricity tariffs and remove subsidies, citing the prevailing economic challenges gripping the nation.
During a plenary session on Wednesday, the Senate unanimously rebuffed these plans, highlighting the need to alleviate the burdens already weighing heavily on Nigerians.
The upper chamber also directed its Committee on Power to investigate the N2 trillion subsidy requirement, as stated by the Minister of Power, Adebayo Adelabu, along with other outstanding debts within the sector. Additionally, they were tasked with examining the state of metering across the country.
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Senator Aminu Abbas (PDP, Adamawa Central), who moved the motion, urging the retention of electricity subsidies, voiced the Senate’s collective concern.
Speaking on the alarming indebtedness of DisCos to power generating companies and gas companies, which currently stands at a staggering sum exceeding N3 trillion, Abbas said: “[the] Senate notes with greatest dismay the plan to increase electricity tariff by the relevant statutory authority in gross disregard of increased economic challenges with attendant widespread poverty and high cost of living.”
He added, “The Senate may note that the Minister of Power was reported as saying that the nation must begin to move towards a cost-effective tariff model, as the country is currently indebted to the tune of N1.3tn to generating companies (GenCos) and $1.3bn owed gas companies.
“According to him, out of over N2tn needed for the subsidy, only N450 billion was budgeted this year.
“The same electricity businesses are collecting money from customers for services not rendered when they have not added anything to the equipment, they inherited it from PHCN.
“Communities buy transformers to replace damaged ones in addition to overburden bills and arbitrary estimates for unmetered customers.”
“The prospect of higher electricity bills is untenable in a country where a significant portion of the population lives below the poverty line,” Abbas asserted.
He noted the dire consequences the situation has put individuals and small businesses in, especially amidst stagnant wages and skyrocketing inflation rates.
The Senate’s resistance to the proposed tariff hike was partly buoyed by the outcry of consumers over exorbitant charges levied on unmetered customers by Distribution Companies (DisCos). Senator Abbas condemned the DisCos for their unjust billing practices, which further compounds the financial strain on vulnerable segments of society.
Echoing Abbas’s sentiments, Senator Aminu Tambuwal (PDP, Sokoto South) denounced the notion of raising electricity tariffs during times of economic hardship, labeling it counterproductive and insensitive to the plight of the populace.
Senator Orji Kalu (APC, Abia North) echoed similar sentiments, emphasizing the urgent need to prioritize improvements in transmission and distribution infrastructure overburdening consumers with additional costs.
The Senate’s resolution underscores the need for a comprehensive inquiry into the financial health of the power sector, encompassing outstanding debts and the state of metering nationwide. The Committee on Power has been tasked with conducting a thorough investigation into the N2 trillion subsidy requirement and other outstanding sectoral debts, to formulate actionable recommendations to tackle the underlying challenges.
Nigeria’s electricity sector continues to grapple with inadequate generation capacity, hovering around 4,137.60MW as of February 2024. This shortfall has resulted in heavy reliance on alternative power sources, further straining household budgets, particularly in the wake of skyrocketing fuel prices following the removal of petrol subsidies last June.
The prevalence of estimated billing due to insufficient metering also exacerbates the financial burden on consumers, impeding efforts to justify any proposed tariff adjustments. Consequently, Nigerian lawmakers said the DisCos must be held accountable for their billing practices and be compelled to prioritize metering initiatives to ensure transparency and fairness in electricity billing.
The Senate’s rejection of the proposed electricity tariff hike and subsidy removal, while it protects consumers from further exploitation, exposes once again the voids in the power sector. Experts have called for concerted efforts to address systemic challenges within the power sector and enhance service delivery.
Moreover, the implications of poor electricity supply on the economy cannot be overstated. Inconsistent power provision stifles industrial productivity, inhibits business growth, and undermines investor confidence. The manufacturing sector, in particular, bears the brunt of erratic power supply, resulting in increased production costs and diminished competitiveness in the global market.
Furthermore, unreliable electricity access hampers technological advancements and innovation, hindering the transition to a knowledge-based economy. Small and medium-sized enterprises (SMEs), which form the backbone of Nigeria’s economy, are disproportionately affected, grappling with operational challenges and constrained growth opportunities.
The cumulative effect of epileptic power supply translates into reduced employment opportunities, heightened poverty levels, and constrained economic growth. Addressing the systemic deficiencies within the power sector is thus imperative for unlocking Nigeria’s full economic potential and fostering sustainable development.