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Tuesday, May 17, 2022

Cost of electricity subsidy drops to N30 bln from N50 bln ~Power Ministry

Nigeria spends about N30 billion on electricity subsidies every month, down from the previous figure of N50 billion as the federal government continues to augment energy consumption for low earners in the country.

According to a document prepared by the Federal Ministry of Power, the government’s subsidy on electricity had been reduced by N20 billion monthly following improvements in the collection of power tariffs by distribution companies.

“Tariffs rose by 36 percent from September 2020. Collections have grown by 60 percent plus.

“Government subsidy has been reduced by N20 billion per month. Record collections of N65 billion hit in December 2020 cycle (from average of N39 billion),” the ministry wrote in the report.

In February this year, the Minister of Power, Sale Mamman, stated that the Federal Government was subsidising electricity supply across the country to the tune of over N50 billion monthly.

Mamman had explained that the subsidy spending was because the government was worried by the incessant complaints by ordinary Nigerians over the unavoidable and periodic increase in the cost of electricity.

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He said the funds were provided to augment the shortfall by the power distribution companies who had failed to defray the cost of bulk electricity supplied to them by the generating companies.

He had further explained that following a minor increase in the tariff regime, the subsidy decreased but still constituted a serious drain on the nation’s economy.

Aside from subsidising electricity, the Nigerian government also subsidises Premium Motor Spirit, popularly called petrol, despite calls against this by both local and international organisations and experts.

Earlier this month, for instance, the International Monetary Fund expressed concern over the resurfacing of subsidies in Nigeria.

The global institution described the development as concerning, particularly in the context of low revenue mobilisation.

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