Electricity tariff increase imminent, but not by 65% – FG

• The Federal Government said an increase in the electricity tariff is imminent, but not by 65 per cent
• The government said it spends N200 billion monthly on electricity subsidies
• FG said the estimated billing system will be stopped through the Presidential Metering Initiative

The Federal Government says an increase in electricity tariff is imminent but not by 65 per cent as was recently speculated in the media.

The Special Adviser to President Bola Tinubu on Energy, Olu Verheijen, disclosed this in a statement on Monday, February 3.

Verheijen clarified that during a recent press interview she said with the increase in tariffs for Band A consumers in 2024, current electricity tariffs covered approximately 65 per cent of electricity costs, while the Federal Government still subsidised the difference.

She said, “It has become necessary to clarify media reports suggesting an imminent 65 per cent increase in electricity tariffs.

“This is a misrepresentation of what I actually said in a recent press interview. I highlighted the fact that, following the increase in Band A tariffs in 2024, current tariffs now cover approximately 65 per cent of the actual cost of supplying electricity, with the Federal Government continuing to subsidise the difference.”

FG spends N200 billion monthly on electricity subsidy

The president’s aide also stated that the Federal Government spends N200 billion to subsidise electricity monthly.

She said the subsidy amount benefits only the wealthiest 25 per cent of Nigerians rather than those who truly need assistance.

Verheijen stressed that the government is committed to ensuring fairer pricing over the long term, but it is focused on taking decisive action to deliver more electricity to Nigerians in the immediate time, ensure fewer outages, and guarantee the protection of the poorest and most vulnerable Nigerians.

She said to achieve this, the Federal Government’s priorities for the power sector include working towards a targeted subsidy system to ensure that low-income households receive the most support.

“Today, the Federal Government spends over N200 billion per month on electricity subsidies, but much of this support benefits the wealthiest 25 per cent of Nigerians rather than those who truly need assistance.

“To address this, the Federal Government is working towards a targeted subsidy system to ensure that low-income households receive the most support. This approach will make electricity more affordable and accessible for millions of hardworking families,” she stated.

FG working to end estimated billing through metering initiative

Verheijen added that the Federal Government is working to end the estimated billing system through the Presidential Metering Initiative so that unmetered customers would be made to pay for services not enjoyed if the tariff is increased.

She added that metering will also enhance revenue collection and encourage investment in the sector.

Verheijen said, “One of the most significant steps in this reform is the Presidential Metering Initiative, which is accelerating the nationwide rollout of seven million prepaid meters, starting this year.

“This will finally put an end to the practice of estimated billing, giving consumers confidence in what they are paying for and ensuring transparency in electricity charges.

“Metering will also improve revenue collection across the sector and will attract the investments needed to strengthen Nigeria’s power infrastructure.”

She further revealed that the Federal Government is addressing the challenge of huge debts owed to power generation companies, which is one of the major roadblocks to improved service.

“For years, these debts have prevented investments in new infrastructure and hampered efforts to improve electricity supply.

“By clearing these outstanding obligations, the government is ensuring that power companies can reinvest in better service delivery, stronger infrastructure, and a more stable electricity supply for all Nigerians,” she said.

Verheijen added that through such fiscal incentives as Value Added Tax (VAT) and Customs Duty Waivers, the Federal Government is working to lower the cost of alternative power sources such as Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG).

Electricity tariffs should be charged based on consumption not ‘bands’ – MAN

Meanwhile, TheRadar earlier reported that the Manufacturers Association of Nigeria (MAN) said electricity tariffs should be charged based on consumption and not the ‘band’ system that currently obtains.

MAN added the categorisation of electricity consumers into ‘bands’ is discriminatory and not based on any scientific consideration, calling on the Federal Government to stop the system.