Federal Government Insists on Reviewing Electricity Tariffs in 2024

On Monday, the Federal Government announced that it is reviewing the implementation process for a cost-reflective electricity tariff. Still, it stated plans to continue subsidizing power supply for vulnerable Nigerians.

The FG also said it would unbundle the Transmission Company of Nigeria by separating Transmission services from System and Market operations in Q1 2024.

This plan was revealed by the Minister of Power, Chief Adebayo Adelabu, in a statement issued by the Federal Ministry of Power in Abuja. Also, in the event, the Minister said that the key to long-term power transmission in the country is to separate the power transmission grid into regional grids to enable effective management.

Before this announcement, a false report stated that Discos was planning to increase tariffs. Still, it was debunked on Monday as power distribution companies reported no plan to raise tariffs starting January 1, 2024, stressing that the Nigerian Electricity Regulatory Commission had yet to issue any directive.

But in the statement from the Federal Ministry of Power in Abuja on Monday, the Minister was quoted as having stated that the process for implementing a cost-reflective tariff was ongoing.

Power tariffs are reviewed every six months to reflect the economic realities across the country, considering the inflation cost of gas required to fire most power plants.

THE STATEMENT READS,

• Our primary focus is enhancing distribution and transmission infrastructure to minimize technical and commercial losses. The need for more liquidity continues to be a significant challenge in the electricity market.

• We are currently reviewing the implementation process of a cost-reflective tariff, while the government will continue to subsidize power supply to those who are vulnerable in our society.

Adelabu also added as he outlined other strategic actions that the ministry will take, 

• Closing the metering gap is imperative, and ongoing initiatives, including World Bank programs and the Presidential Metering Initiatives, will gain momentum.

• The ministry will intervene in distribution infrastructure, supplying transformers to communities without burdening citizens financially.

Adelabu also stated that rural electrification will remain a government priority as it plans for more solar-powered mini/microgrids and street lights while collaborating closely with Discos and state electricity boards.

He said,

• We have reactivated the Presidential Power Initiative (Siemens Project), which will strengthen the national grid and minimize technical losses.

• We will also implement the Eastern and Western super grid projects to strengthen the grid and increase electricity supply to demand centers in the country.

• The Transmission Company of Nigeria will be reconstituted in the short term, separating Transmission services from System and Market operations in the first quarter of this year. In the medium to long term, the Transmission grid will be divided into regional grids to enable effective management.

The minister also spoke about building government-owned plants while allowing private companies to invest further. 

He said,

• Off-grid and distributed generation, utilizing renewables, will be a focal point; solar PV plants, small hydroelectric plants, and wind farms will be strategically deployed.

Speaking about power theft, the minister said tackling power theft and vandalism was very important.

• This national responsibility requires joint efforts to protect our assets. The ministry has informed the National Security Adviser of recorded cases, and collective action is essential to eliminating these setbacks.

He also revealed that the ministry, agencies, and Discos worked tirelessly during the yuletide season to enhance power supply while acknowledging positive improvements.