Why electricity subsidy can’t continue, – minister

The Federal Government might no longer be in a position to sustain the subsidy on electricity.

This is because the government is weighed down by N1.3 trillion debts to power Generation Companies (GenCos) and another $1.3 billion to gas firms.

Power Minister Adebayo Adelabu, who dropped the hint yesterday at a news conference, said that N2.9 trillion would be needed to fund electricity subsidies this year.

Adelabu described the paltry N450 billion budgeted for subsidy in the 2024 Appropriation Act as a far cry from the requirement.

According to him, the time has come for the nation to decide on whether electricity is a commercial utility or a social service.

He listed the implementation of a cash reflective tariff, or cashed-backed government guaranteed subsidy regime to inject liquidity to the sector as the options open to the government for the funding of the over 80 per cent deficit between the N2.9 trillion and N450 billion.

The minister said: “What was made provision for in the budget for subsidy is N450 billion. And we require N2.9 trillion for subsidy. Can we afford it? Let’s be realistic. Can we afford it? N450 billion is less than 20 per cent of the almost N3 trillion that is required for subsidy if we must continue at this time.

“These are the things we need to discuss as a nation. But, depending on the outcome of the decision of whether electricity is a commercial product or social service. Or either we implement a cost reflective tariff or in the alternative a cashed backed federal government guaranteed subsidy regime to inject liquidity to the sector.”

Adelabu, who identified paucity of cash as the major constraint to steady power supply, noted that the government has not funded subsidy since January.



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