- Though invisible, the subsidy has always been a part of the power sector so that Nigerians can afford electricity.
- The current realities in the foreign exchange market would make it impossible to impose the actual cost of electricity on Nigerians.
The Association of Electricity Distributors of Nigeria (ANED) has said that most Nigerians cannot afford the actual cost of power supplied without electricity subsidies. This was even as it said that the Federal Government would continue to pay electricity subsidies until the industry is fully mature and attains a status of charging cost reflective tariff.
During a live television interview last week, ANED’s Regulatory Specialist, David Adeyeye, disclosed the latest industry position. The clarification comes as the Nigerian Electricity Regulatory Commission (NERC) said the Federal Government paid N135.23 billion to subsidise electricity consumption in the second quarter of 2023.
Adeyeye had argued that with the current realities in the foreign exchange market, imposing the actual cost of electricity on Nigerians would be a near impossibility. ‘‘Today, as we speak, the naira exchange rate to a dollar is about N1,150. So, if you allow that, the cost of power becomes unsustainable. That is why a cushion that works must be created to allow Nigerians access to power because we need power to run the economy.
“It is something that the government must have a hand in until we increase the capacity of Nigerians to earn more and be able to power for a cost-reflective tariff. All over the world, there is a form of subsidy, especially for the power sector because it is a highly capitalised industry, and Nigeria is not doing something abnormal,’’ he said.
Adeyeye explained that to keep the industry alive, the Federal Government must continue to provide subsidies. He added that, though invisible, subsidy has always been a part of the power sector. He said that in 2013, the FG, through the Central Bank of Nigeria, provided the stabilisation fund to the Discos to cover the gap between cost reflective and allowed tariff. Aside from the stabilisation fund, he said, the Federal Government equally provided the N701 billion payment assurance guarantee to cushion market shortfalls.