Senators reject plans to hike electricity tariffs and to scrap federal government subsidies

SENATORS have voted against plans by the Federal Ministry of Power to approve the proposed hikes in electricity tariffs by Nigeria's distribution companies and have also rejected plans to remove subsidies in the light of the present economic hardships in the country.

At the moment, Nigeria is reeling from the impact of chronic hyper-inflation, with the cost of basic food prices soaring and rising on a daily basis. Some economists have put the crisis down to President Bola Tinubu's decision to abolish petrol subsidies, which they say resulted in higher transport costs, which had a knock-on effect in other sectors of the economy.

Now, there are fears that the crisis could get worse as the federal government contemplates removing electricity subsidies in the coming days. On February 14, the minister of power, Adebayo Adelabu, said the government can no longer continue paying electricity subsidies as its indebtedness amounts to about N3trn ($2bn).

Faced with the rising cost of living, economic hardship and soaring inflation, which reached an all-time high of 29.90% in January, the burden of electricity subsidy removal would further worsen the pains for most Nigerians. However, the International Monetary Fund believes Nigeria should put a stop to electricity subsidies in the same manner it did with fuel and floated the naira.

Yesterday, the matter was debated in the National Assembly with senators calling on the government to forget the idea of an increase in electricity tariffs. Senators also directed the committee on power to investigate the N2tn required for electricity subsidy payment, other debts owed in the sector and the state of metering in the country.

A resolution of the Senate followed its consideration and approval of a motion moved by Senator Aminu Abbas during plenary on the need to retain subsidies on electricity in the country for the foreseeable future. In his lead debate, Senator Abbas said the senate notes with greatest dismay the plan to increase electricity tariffs by the relevant statutory authority in gross disregard of increased economic challenges with attendant widespread poverty and high cost of living.

He added:  “The senate may note that the Hon minister of power was reported saying the nation must begin to move towards a cost-effective tariff model, as the country is currently indebted to the tune of N1.3tn naira to generating companies and $1.3bn is owed gas companies. According to him, over N2tn needed for subsidy but only N450bn was budgeted this year but the same electricity businesses are collecting money from customers for services not rendered when they have not added anything to the equipment, they inherited it from the Power Holding Company of Nigeria

“Communities buy transformers to replace damaged ones in addition to overburden bills and arbitrary estimates for unmetered customers. Cognisance that in a country where a greater population live below the poverty level, with stagnant wages, rising inflation and depreciating currency, the prospect of higher electricity bill is unattainable.

Contributing to the debate, Senator Aminu Tambuwal said it was  abnormal for the government to consider hiking electricity tariffs in the face of hardship. He stressed that such action should not even be contemplated in the first place.

Similarly, Senator Orji Kalu noted that even advanced economies subsidise electricity. He said: “Why should people be paying for what they did not use? Our focus should be on transmission and  distribution.”