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FG debunks 65% hike in electricity tariffs, reaffirms commitment to equitable pricing structures

 

… to rollout smart meters to 7m households

 

 

BY AKUDORO GLORIA 

 

 

While denying an impending 65 percent increase in electricity tariffs across the country, the Federal Government has reaffirmed its commitment to ensuring an equitable pricing structures in the future.

 

The federal government pledged this commitment through the Special Adviser to the President on Energy, Olu Arowolo Verheijen in a statement issued on Wednesday.

 

Verheijen had earlier disclosed government’s plan to hike electricity tariffs by two-third for many consumers in an interview with Bloomberg that took place on the sidelines of the recently concluded Mission 300 Africa Energy Summit held in Dar es Salaam in Tanzania.

 

“Nigeria’s power prices need to rise by about two thirds for many customers to reflect the cost of supplying it and an increase can be expected within months.

 

“Higher electricity tariffs, which need to be balanced by subsidies for less-affluent consumers are required to fund the maintenance needed to improve reliability and to attract private investors into power generation and transmission.

 

“One of the key challenges we are looking to resolve over the next few months is transitioning to a cost-efficient but cost-effective tariff. So the sector generates revenue required to attract capital, while also protecting the poor and vulnerable”, said Verheijen.

 

Meanwhile, in a current development, the President aide debunked media reports, describing it a misinterpretation of what was initially said.

 

“It has become necessary to clarify media reports suggesting an imminent 65 percent 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 percent of the actual cost of supplying electricity, with the Federal government continuing to subsidize the difference,” Verheijen clarified.

 

This is even as the President aide announced that through the Presidential Metering Initiative (PMI), federal government the planned rollout of smart meters (prepaid meters) across the country starting this year, to end the practice of estimated billing for approximately 7 million households.

 

She also emphasized on the federal government top priorities to addressing several key areas which include; metering, debt reduction and safeguarding Nigeria’s most vulnerable citizens from excessive cost, while making effort to enhance electricity access.

 

On electricity subsidies and settlement of legacy power debt, Verheijen emphasized further that the government spends over N200 billion per month on electricity subsidies. It is making effort to address the outstanding debts owed to power generation companies (GenCos).

 

Moreso, the President aide buttressed on reducing costs for alternative power generation, namely, Compressed Natural Gas (CNG) and Liquified Petroleum Gas (LPG), through a range of fiscal incentives, including VAT and Customs Duty Waivers.

 

“One of the most significant steps in this reform is the Presidential Metering Initiative, which is accelerating the nationwide rollout of 7 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.

 

“Targeted Electricity Subsidies:

Today, the Federal government spends over ₦200 billion per month on electricity subsidies, but much of this support benefits the wealthiest 25 percent 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.

 

“Settlement of Legacy Power Debt: Furthermore, 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,” he stated.