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FG forecasts significant savings from electricity tariff hike

Plans to Install 2.5 Million Meters Annually Aim to Enhance Transparency and Reliability in Power Sector

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The Nigerian Federal Government has projected substantial savings amounting to N1.5 trillion following the recent adjustment in electricity tariffs, alongside plans to deploy 2.5 million meters annually to bridge the metering gap across the nation and ensure fair billing practices.

Bayo Onanuga, Special Adviser to President Bola Tinubu on Information and Strategy, revealed on April 2, 2024, that the withdrawal of electricity subsidies for Band A customers would yield an estimated annual saving of N1.1 trillion. However, according to a document from the Federal Ministry of Power, the recent tariff revision is expected to generate even greater savings of N1.5 trillion.

The government’s decision to recalibrate electricity tariffs aims to enhance liquidity within the Nigeria Electricity Supply Industry (NESI) while ensuring fair pricing for consumers. Notably, power distribution companies (Discos) will face penalties for supplying less than 20 hours of electricity to Band A consumers.

Despite these projections, the tariff hike has faced opposition from manufacturers and organized labor, particularly concerning its impact on approximately 1.9 million consumers. The tariff adjustment, announced by the Nigeria Electricity Regulatory Commission, entails an increase from N68 to N225 per kilowatt-hour for Band A customers, representing a substantial 240% rise.

However, the government emphasizes that Band A customers will benefit from up to 20 hours of daily power supply under the new tariff structure. Nonetheless, criticism persists regarding the increased financial burden on consumers amidst concerns about affordability.

In tandem with the tariff adjustment, the Federal Government aims to address the longstanding issue of metering deficiencies. With only 5,707,838 out of 12,825,005 registered electricity customers having meters, over 7.1 million customers remain subject to the unreliable estimated billing system.

To rectify this gap, the government has launched the Presidential Metering Initiative, with a target of installing 2 to 2.5 million meters annually over the next five years. Minister of Power, Adebayo Adelabu, highlighted the initiative’s objective to eliminate estimated billing by the end of 2024 and close the metering gap within three to five years.

Adelabu stressed the importance of transparency and objectivity in the billing system, acknowledging the widespread dissatisfaction with estimated billing due to its susceptibility to manipulation. The government’s commitment to closing the metering gap aligns with its broader agenda to enhance the stability and reliability of Nigeria’s power supply.

As the country progresses towards achieving its metering targets, citizens remain hopeful for a more transparent and equitable electricity billing system. However, challenges persist, requiring sustained efforts from the government and stakeholders to ensure the effective implementation of reforms and the realization of tangible benefits for consumers across Nigeria.

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