The Federal Government is set to redirect about N1 trillion savings from the electricity subsidy removal to social services and power supply improvements across the country.
The Minister of Information, Mohammed Idris, while speaking at a Radio program in Kaduna, said the new electricity act signed by President Tinubu empowers the Nigerian Electricity Regulatory Commission (NERC) to sanction power distribution companies (Discos) who fail to meet their end of the contract.
- He said, “It is essential to emphasize that the funds to be saved from the withdrawal of electricity subsidy will be reinvested in enhancing power supply across the country and improving other vital social services such as health and education.”
The Minister also stated that the post-fuel subsidy intervention of the Federal Government such as the cash transfer program to vulnerable Nigerians and the provision of CNG buses are still on track.
For the N25,000 cash transfer program, the Minister noted that the presidential committee set up to review its operational mechanism has submitted its report, noting that it would commence soon.
Backstory
The Federal Government, through the NERC, recently increased the electricity tariff for Band A users who receive at least 20 hours of electricity daily to N225 KWh- a hike of around 300%.
- The Federal Government noted that the new tariff is a more cost-reflective tariff and only affects around 17% of total electricity consumers who reportedly receive about 40% of the nation’s power supply.
- Also, the new cost-reflective tariff will result in significant reduction in the electricity subsidy bill of the government. According to a Nairametrics analysis, the Federal Government projected to spend around N1.67 trillion in electricity subsidy in 2024- an increase of about 170% from the previous year.
- However, that figure is projected to drop by 52% per month following the removal of electricity subsidy for the B and A users.
