The Nigerian Electricity Regulatory Commission (NERC) has projected that the Federal Government will spend approximately N2.4 trillion on power subsidies by the end of 2023. This revelation came during the PwC Annual Power and Utilities Roundtable, where NERC’s Commissioner of Planning, Research, and Strategy, Dr. Yusuf Ali, noted that the subsidy amount fluctuated due to foreign exchange challenges and tariff adjustments. As reported, the subsidy stood at N1.9 trillion in November and is projected to escalate monthly, with December’s expected subsidy reaching N260 billion. Dr. Ali emphasized that the N2.4 trillion is an annual estimate subject to change based on the difference between cost-reflective tariffs and approved tariffs, culminating in final calculations at the year’s end based on actual consumption and trends.
During the event, the Minister of Power, Adebayo Adelabu, represented by Chief Technical Adviser Adedayo Olowoniyi, highlighted collaborative efforts with PricewaterhouseCoopers to draft the Integrated National Electricity Policy aimed at tackling key challenges within Nigeria’s electricity sector. The Minister stressed the necessity of implementing cost-reflective tariffs, which he believes are crucial to attracting investment and ensuring the sustainability of the sector. He pointed out the pitfalls of a market that fails to offer clear returns for investors, arguing that such conditions will deter investment and inhibit progress toward achieving reliable electricity supply.
The Minister acknowledged the hesitation around adopting cost-reflective tariffs but insisted that this step is vital for realizing 24-hour electricity access for all Nigerians. He emphasized that the current government’s initiatives, reflecting the Renewed Hope Agenda, include the implementation of the Electricity Act of 2023 and the Presidential Power Initiative developed in collaboration with Siemens. Despite these measures, Adelabu pointed to the persistent problems plaguing the sector, such as infrastructure aging, vandalism, and inefficiencies throughout the electricity value chain, which continue to impede advancement toward the desired improvements in service delivery.
In addressing the issues stemming from vandalism, Adelabu revealed that the Transmission Company of Nigeria allocated nearly N10 billion over six months for repairing damaged towers, highlighting that these challenges have led to frequent grid disturbances. He explained that while the government has made strides in infrastructure development, including the construction of substations and the upgrading of both transmission and distribution networks, these efforts have been met with significant hurdles. He articulated a vision for the future of Nigeria’s power sector, one rooted in innovation and actionable strategies aimed at restoring confidence among stakeholders.
Adelabu concluded by stating that collective accountability is essential among all stakeholders in the power sector. He underscored that hope should not be a passive sentiment but one that drives active engagement in implementing bold ideas. He reiterated the need for collaboration and innovation to create a sustainable energy future for Nigeria, fostering optimism against the backdrop of ongoing challenges. The Minister’s remarks, alongside Dr. Ali’s financial projections, paint a comprehensive picture of a sector grappling with significant obstacles but also fueled by strategic initiatives aimed at enhancing efficiency, attracting investment, and ultimately ensuring electricity access for all Nigerians.
The discussions at the roundtable underscore a critical period for Nigeria’s electricity sector, as it seeks to balance subsidies, infrastructure needs, and the imperative for sustainable growth. The emphasis on cost-reflective tariffs signifies a transformation journey that aims to resolve systemic inefficiencies while addressing investor concerns. Overall, stakeholders are called to unite in their efforts to forge a resilient power sector that can withstand economic fluctuations while meeting the electricity demands of its populace.
