Stakeholders advocate power sector overhaul for efficiency as against subsidy
Stakeholders yesterday expressed concerns over the Federal Government’s plan to overhaul its electricity subsidy programme, which currently costs over N200 billion monthly.
They saw a sense in rejigging the subsidy framework but insisted that the power sector needed the overhauling more than energy pricing given the high level of inefficiency, debt and wobbling infrastructure that make consumers pay heavy tariffs.
The Special Adviser to the President on Energy, Olu Verheijen, had stated that the existing subsidy framework disproportionately benefits the wealthiest 25 per cent of Nigerians, leaving vulnerable households with less support.
To address this imbalance, the government is developing a targeted subsidy system that will direct relief to low-income households. This approach is expected to make electricity more affordable and accessible for millions of hardworking families nationwide.
She emphasised that the new system would ensure the efficient allocation of resources, prioritizing those who genuinely need assistance over affluent consumers.
The move comes amid growing concerns over the sustainability of the current subsidy structure, which critics argue significantly strains public finances without achieving equitable outcomes.
She added that the Federal government is addressing one of the major roadblocks to improved service, the mounting debts owed to power generation companies.
“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 emphasised that the Federal Government is working to lower the cost of alternative power sources such as Compressed Natural Gas (CNG) and Liquified Petroleum Gas (LPG) through a range of fiscal incentives, including VAT and Customs Duty Waivers.
She mentioned that every policy is designed with the Nigerian people in mind eliminating unfair estimated billing, ensuring that subsidies benefit the right people, and creating the conditions for stable, affordable electricity.
“The government fully understands the economic realities facing citizens and is committed to ensuring that reforms in the power sector lead to tangible improvements in people’s daily lives.
She said these reforms are laying the foundation for better service delivery, expanded access to electricity for homes and businesses, and unlocking prosperity for all Nigerians.
Executive Director of PowerUp Initiatives, Adetayo Adegbemle, stated the country is sacrificing the quality of service and potential investments in the power sector on the altar of subsidy. He stressed that the subsidy regime is not sustainable, emphasising the need for fresh ideas and approaches to attract investment and set tariffs. Adegbemle noted that, fortunately, the federal government is now following his recommendations.
“What we are going to be experiencing going forward is the removal of blanket subsidy in the power sector, and targeted “capped” consumer assistance support.
“The power sector will be better for it, as investors can now be assured of their cost recovery, and funds can be available for investments to improve power supplies and quality of supply,” he said.
Adegbemle added that the federal government has made provisions for the Consumer Assistance Support Fund with a capped 50kWh for every consumer. He highlighted that allowing DisCos to implement cost-reflective tariffs through the Power Consumer Assistance Fund (PCAF) helps them cover operational expenses and fulfil financial commitments to GenCos, effectively addressing the long-standing cash flow challenges in NESI and promoting a stronger supply chain.
However, the National Coordinator of the All Electricity Consumers Protection Forum, Adeola Samuel-Ilori argued that the new tariff is just another way for the government to reduce the public’s purchasing power. He pointed out that many orders and directives from the regulatory commission, which could have provided relief to consumers facing unfair tariffs, remain ignored.
He criticized the agency for imposing tariffs without adhering to the proper legal process, citing the recent 300 per cent increase in Band A tariffs, which they are challenging in court as a scam and illegal.
“But if they introduce a new tariff outside and beyond what was issued in January 2024 to the effect of implementation in January 2025, then we will resist it. All Electricity Consumer Protection forum which I’m the national coordinator will mobilise against it, and we will get it reversed with massive protests.
“It’s not rocket science to see that we had grid collapsed every atakumosa market day due to moribund equipment and obsolete machinery in our substations some as far back as 1965 in the days of ECN yet they always believe they can fool us to imposed on us what they call tariff increase without correspondence service delivery,” he said.
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