• Naira devaluation, inflation worsen NESI, Tinubu struggles with payment
• Kwara Assembly to investigate DisCo over poor supply, metering
Electricity subsidy in Nigeria has risen exponentially to about N6 trillion in the last 10 years, even as the President Bola Tinubu administration struggles to keep a commitment to funding the power sector.
Between January and February, this year alone, electricity subsidy jumped to N267 billion, while payment to generation companies dropped from 92 per cent in 2022 to 12 per cent in January and February, an indication that power generating plants are inching towards shutdown.
According to industry statistics seen by The Guardian, the subsidy, which was N12 billion in 2022, moved to N37 billion between January and April 2023. It went up to N55 billion between May and September, and settled at N74 billion between October and December before sharply rising to N267 billion in the first two months of 2024.
As the subsidy mounts, payment to the generation companies is witnessing a drastic nosedive. In 2022, the average settlement of generation invoices was 92 per cent. It went down to 91 per cent between January and April 2023, plummeted further to 66 per cent between May and September of the year, before dropping to 36 per cent between October and December. In the first two months of this year, the payment had plundered to a meagre 12 per cent.
To compound the woes of the sector, gas supply, which is sold to generation plants at an obligated $2.18 per Million British Thermal Unit (MMBTU), now faces naira-induced challenges. While the cost per MMBTU in naira was only N390 in 2021, it went to N411 per MMBTU in 2022. It rose to N653 per MMBTU in 2023 and N800 per MMBTU in January, this year, before soaring to N1, 496 in February.
At the same time, inflation significantly rose from 16 per cent to about 31 per cent in February this year. As of 2015, electricity subsidy in Nigeria was N225 billion; N308 billion in 2016; N351 billion in 2017; N440 billion in 2018; N528 billion in 2019; N501 billion in 2020; N251 billion in 2021; N144 billion in 2022; N645 billion in 2023; and has been projected to hit over N2 trillion in 2024.
As of December, only about seven of the 20 electricity generation plants were viable. Also, some of the plants were producing only about 0.2 per cent of their installed capacity.
The Nigerian Electricity Regulatory Commission (NERC), in its third quarter report for 2023, showed that troubles await the ageing plants, such as recurring maintenance, even as liquidity and gas constraints keep the plants below par.
Nigeria, which had projected 40,000 megawatts of electricity generation by this year, has repeatedly described the generation segment of the electricity market as the strongest in the power sector. However, only about 3,500 MW of the 12,643MW of installed capacity has remained.
In June last year, Tinubu suspended the Multi-Year Tariff Order, opting to subsidise electricity, after former President Muhammadu Buhari introduced a gradual phase-out of subsidy from the sector. But finding by The Guardian showed that the current administration, struggling to finance the salaries of workers, has not been able to keep up with paying the differences between allowed tariff and cost reflective tariff.
Meanwhile, the Kwara House of Assembly has urged Governor Abdulrahman Abdulrazaq to direct the Ministry of Energy to investigate recurring erratic power supply and poor metering in the state.
This followed the adoption on Tuesday of a motion, titled ‘Need to Address the Poor Services of Ibadan Electricity Distribution Company, IBEDC, and Curb the Extortionist Tendencies of the Company’s Staff in Kwara State’.
The motion was sponsored by Abdulganiyu Folabi-Salau (APC, Omupo). Folabi-Salau observed that the Federal Government has encouraged Nigerians to adopt the prepaid metering system and directed various distribution companies to make it available.
He said this was, however, being frustrated by IBEDC staff, who prefer to subject innocent customers to outrageous estimated billings, which are not commensurate with electricity consumption.
Other lawmakers, in different submissions, expressed concern over poor power supply, exploitation of electricity consumers through the estimated billing system, and high cost of getting prepaid meters.
The Speaker, Yakubu Danladi-Salihu, later read out the House’s resolutions. It urged the IBEDC management to ensure that good prepaid meters were provided for electricity consumers in Kwara, while the estimated billing system should be stopped without further delay.
Danladi-Salihu also directed the House Committee on Energy to interface with IBEDC in Kwara to curb the arbitrary billing system, and resolve all other matters needed for effective service delivery.
Relatedly, a member of the Sokoto State House of Assembly, Abdullahi Randa (PDP, Tureta) called on the state government to reconnect his constituency with the national grid. Randa made the call in a motion he presented to the Assembly, yesterday.
The motion, seconded by Faruk Sidi (APC, Gwadabawa South), emphasised the need to restore electricity to several villages in Tureta and Dange-Shuni Local Councils.
The affected areas listed by the lawmaker include: Kanfanin Ala, Lanbar Tureta, Kanfanin Diya, Bi-Masa Tasha, Bi-Masa Gari, Dorawa, Tureta town, and Gidan Kare in Tureta Council. The rest are: Bodai, Illelar Bissalam as well as Dabagi in Dange-Shuni Council.
Randa highlighted longstanding electricity challenges faced by the communities, citing the breakdown of poles after heavy storms, and theft of cables and insulators.
“This has continued to adversely impact socioeconomic activities, with small businesses being forced to close or operate at a loss due to reliance on electricity. Moreover, the ugly situation has continued to negatively affect our hospitals and pharmaceutical stores, as they struggle to store temperature-sensitive drugs without refrigeration,” he said.
In response to Randa’s motion, the Speaker, Tukur Bala, conducted a voice vote, which witnessed unanimous support from lawmakers, calling for an urgent intervention to address the electricity crisis in the affected areas.
