Nigeria Moves to End Electricity Subsidy by January 2022

Nigeria government set to end all subsidies and financial intervention in the electricity market by January 2022 paving the way for customers to pay what the government calls full commercial price for power.

Speaking at the stakeholders’ engagement meeting organised by the Nigerian Electricity Commission (NERC) in Lagos, Special Adviser to the President on Infrastructure, Ahmed Zakari, said the Federal government intends to reduce its interventions in the Power Sector and thus allowing market participants to determine the course of action.

He said “We must move to a market where a person that buys power, pays for power. A Disco that buys power, pays for that power from the Genco that gives power. It’s very simple. It’s called commerce. Having middle structures in a way that promotes a lack of accountability does not work. And this administration is committed to making this a level playing field,”

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However, there are obstacles on the way. This includes opposition from labour groups and many citizens who oppose raising tariffs without the provision of electricity meters.

One of the participants at that public hearing and Executive Director, Center for Transparency & Accountability in the Energy Sector, Barrister Abel Godson, stated that “with the deteriorating nature of electricity supply in the country, coupled with a deteriorating and ageing infrastructure within the electricity network, government’s pre-occupation should be about stabilizing the market, and not tariff hike.”

The Federal Government and Labour had gone into extensive discussions prior to the implementation of the Service-Based Tariff in November 2020, where the electricity regulator (NERC) had promised improvement in service delivery to Nigerians.

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Zakari also said the highest peak generation of electricity for the month of September was 4694mw including electricity exports, what was available for Nigerians in-country came down to 3863mw, this is as opposed to the 30,000mw demand for electricity.

This denotes that the country is providing roughly 11 per cent of the citizens’ demand for electricity despite the huge government interventions in the power sector.

Nigerian government within the past two years has committed over N1.3trillion as intervention funding in the power sector.

At the NERC stakeholder’s forum, concerns were raised about the power sector moving backwards rather than forging ahead.

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Presidency spokesman at the forum Mr Zakari also mentioned that Nigeria has one of the poorest supplies of electricity despite the power sector contributing 78 per cent to GDP growth for Q2 2021.

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