The Federal Government plans to gradually increase electricity tariffs in order to reduce the financial burden on government expenditures.
The Minister of Power, Adebayo Adelabu, announced this during a recent visit to the headquarters of the Ibadan Electricity Distribution Company (IBEDC). As a result, electricity subsidies will be phased out.
He said, “As it is today, the Federal Government still subsidises electricity because the current tariff DISCOs are allowed to charge is not cost-reflective.
“This is why the Federal Government spent close to N700 billion in 2023 to subsidise electricity. If tariffs are left at this current rate, it is projected that the government will spend about N1.7 trillion to subsidise electricity. The FG cannot afford that.”
“There must be an upward review of the electricity tariff in order to reduce the amount of subsidy required. If we make the tariff 100 per cent cost-reflective, the burden will be too much on our people.
“We don’t want that. To reduce the burden on our people, it is only a fraction of the tariff review that will be reflected.”
According to the minister, prior to the tariff reassessment, awareness campaigns and campaigning would be launched to support the rationale for the proposed hike. He explained that the tariff adjustment will be “graduated,” with the rich facing a bigger rise and the less fortunate seeing a lower impact.
Adelabu further noted that “there must be an improved power supply” for the evaluation to take place.
He stated that the purpose of the tour is to analyse and appraise the country’s power infrastructure.
“It also includes visiting the institution that carries the primary responsibility of electricity distribution in the state,” he added.
The minister has already inspected critical transmission infrastructure in the state, including the Ayede 330/132KV transmission substation in Ibadan. He also stated intentions to launch solar-powered mini-grids in specified local government regions, managed by the Rural Electrification Agency (REA).
“I am happy to be here for the first time to meet with the management of IBEDC. I am here to discuss the state of performance in the power sector. Effort to improve its performance is a collective one.”
He stated that the power sector’s performance was unsatisfactory, emphasising the importance of collaboration between the government and private sectors.
“IBEDC is the largest of the DISCOs in terms of coverage. The consumers’ expectations of us are very high, and we cannot afford to disappoint them.
“President Bola Tinubu, during his election campaign, promised a stable power supply to the people. In his priority areas, power comes first.
“There is nothing we can achieve in terms of economic growth and national development without a reliable electricity supply.”
He stated that the purpose of his visit to the Ayede substation, which was erected in 1978, was to “look at the possibility of an upgrade and also the establishment of another 330KVA substation in Ibadan to reduce the load on the existing one.
“We are also working on establishing a new 132KVA substation in Eleyele and UI, which we believe will also improve the capacity of the transmission infrastructure.”
Kingsley Achife, CEO of IBEDC, responded by thanking the minister for his first visit to the firm and requesting an adjustment in the power pricing.
