The Federal Government has disclosed that it allocates N200 billion monthly to subsidize electricity. This expenditure primarily benefits the wealthiest 25 percent of Nigerians, rather than those in genuine need of assistance.
Olu Verheijen, the Special Adviser to President Bola Tinubu on Energy, clarified this in a statement released on Monday. Her remarks came in light of recent reports stating that electricity tariffs would soon rise by two-thirds to bolster the power sector.
While Verheijen did not deny the potential tariff increase, she emphasized that she did not explicitly state that the hike would be 65 percent.
“It is important to clarify misleading media reports regarding the expected 65 percent surge in electricity tariffs,” she said. “I aimed to convey that, after the anticipated increase in Band A tariffs in 2024, the current tariffs only cover approximately 65 percent of the actual cost of electricity supply, with the Federal Government covering the remaining gap through subsidies.”
She noted that while the government is committed to establishing fairer pricing structures in the long term, the immediate priority remains on enhancing electricity delivery, reducing outages, and protecting the most vulnerable citizens.
Consequently, Verheijen announced that the government is working toward a targeted subsidy system aimed at ensuring low-income households receive essential support. “Currently, over ₦200 billion is spent each month on electricity subsidies, but a significant portion of this assistance reaches the wealthiest 25 percent rather than those who truly require help. Our new strategy will make electricity more affordable and accessible for millions of hardworking families.”
Addressing concerns regarding unmetered customers potentially facing charges for services not received if tariffs are raised, she highlighted the government’s commitment to the Presidential Metering Initiative.
“This initiative will accelerate the distribution of 7 million prepaid meters nationwide, starting this year, thereby eliminating estimated billing and enhancing consumer confidence in their electricity payments. Metering will also boost revenue collection and attract investments crucial for fortifying Nigeria’s power infrastructure,” she explained.
Verheijen also pointed out that the government is tackling a significant barrier to improved service: the substantial debts owed to power generation companies. “These debts have hindered investment in new infrastructure and impeded efforts to enhance electricity supply. By addressing these overdue obligations, we are enabling power companies to reinvest in better service delivery and maintain a more stable electricity supply for all Nigerians.”
Additionally, she mentioned that the government plans to use various fiscal incentives, such as VAT and Customs Duty waivers, to reduce costs for alternative power sources like Compressed Natural Gas and Liquefied Petroleum Gas.
“The government recognizes the economic challenges facing citizens and is dedicated to implementing power sector reforms that result in real improvements in their daily lives. Every policy is designed with the Nigerian populace in mind, aiming to eliminate unfair estimated billing, ensure subsidies support the right segments, and foster conditions for stable, affordable electricity,” Verheijen concluded.
“These reforms will establish a robust foundation for enhanced service delivery, broadened access to electricity for both households and businesses, and ultimately unlock prosperity for all Nigerians.”
