The Federal Government has reduced the electricity subsidy from N3 trillion to N1 trillion, according to Minister of Power Adebayo Adelabu. He made this announcement during a public hearing on electricity tariffs in Abuja, organized by the House of Representatives Joint Committee on Power, Commerce, National Planning, and Delegated Legislation.

Adelabu explained that the introduction of band A, with a higher tariff, played a significant role in reducing the subsidy. “Without an increase in electricity tariffs, the expected subsidy would have been close to N3 trillion,” he said. The government could not afford such a high subsidy, prompting the ministry to devise a model where customers pay for subsidies on band A.

The minister pointed out that this model compensates for the fuel and diesel that consumers use. Despite the tariff increase, electricity costs remain cheaper than fuel and diesel. “We are still about the cheapest in sub-Saharan Africa. Our neighboring countries pay higher,” he noted. Connecting to band A of the national grid is almost 50% cheaper than running on fuel and diesel.

Adelabu assured that President Bola Tinubu’s administration aims to improve the situation in Nigeria and foster industrial development through local manufacturing, which requires energy. He emphasized that the tariff increase was not intended to make life difficult but to make it more affordable in the long run.

Rep. Benjamin Kalu, Deputy Speaker of the House of Representatives, acknowledged the widespread discontent sparked by the tariff increase. The Nigeria Electricity Regulatory Commission (NERC) justified the hike to address the industry’s mounting debt and ensure the power sector’s continued functioning.

Kalu recognized the public’s concerns, stating that higher utility bills could increase operational costs for businesses, potentially leading to higher prices of goods and services. “Such a sharp increase in electricity tariffs would only exacerbate the economic hardships already faced by our people,” he said.

Despite these challenges, Kalu affirmed that lawmakers are committed to working closely with the executive to transform the power sector into a model of efficiency and sustainability. “We are dedicated to providing legislative support to the efforts of the Tinubu administration in reforming the power sector by addressing all legal and legislative impediments,” he added.

The reduction in electricity subsidy and the shift in tariff policy reflect the government’s efforts to balance fiscal responsibility with the need for affordable energy. By addressing the power sector’s financial challenges, the government aims to create a more sustainable and efficient energy system for Nigeria.