- The NBET CEO, Johnson Akinnawo, emphasised that electricity should be viewed as a product with a cost, not just a government-provided service.
- Akinnawo highlighted the importance of educating the public on the financial investments required in electricity generation, transmission, and distribution.
At PwC’s annual Power and Utility Roundtable in Lagos, held Thursday, November 28, Adebayo Adelabu, the Minister of Power called for a reform of Nigeria’s electricity subsidy system to ensure fairness and efficiency.
The event, themed “Reigniting Hope in Nigeria’s Electric Power Sector,” highlighted the growing burden of electricity subsidies, expected to reach N2.4 trillion by the end of 2024, a dramatic 293% increase from the previous year’s N610 billion.
Yusuf Ali, the Commissioner for Planning, Research, and Strategy at the Nigerian Electricity Regulatory Commission (NERC), attributed the surge in subsidies to the challenging macroeconomic conditions in Nigeria.
However, the Minister, represented by his Chief Technical Advisor, Adedayo Olowoniyi, expressed concern that the current subsidy system disproportionately favours high-income individuals who consume the most electricity and have the financial capacity to pay for it. Meanwhile, the economically vulnerable, who genuinely need assistance, receive less support.
“In any market, subsidies are meant to help those struggling to afford electricity. Yet, in Nigeria, the largest portions of the subsidy benefit those with the highest per capita income,” the Minister remarked.
While acknowledging that reforms, such as introducing the Band A tariff system, had begun to address these imbalances, he emphasised that more work is needed to realign the subsidy framework with its intended purpose.
The Minister stressed the importance of a subsidy model that prioritises fairness and efficiency, ensuring that support reaches those who genuinely need it rather than those who can afford to pay for electricity. He added that while progress had been made, further steps were necessary to achieve energy security and sustainability across the country.
Johnson Akinnawo, the Acting MD/CEO of Nigeria Bulk Electricity Trading Plc (NBET), also spoke during a panel session, stressing the need for public education about the true nature of electricity. He argued that electricity should no longer be viewed merely as a government-provided service but as a product with a cost, reflecting the substantial investments involved in its generation, transmission, and distribution.
“Electricity is not just a service; it is a product with a price. The cost of delivering electricity involves a complex value chain, and each step requires substantial financial input from investors,” Akinnawo said, highlighting the need to change the public’s mindset to ensure the sustainable development of the power sector.
The Minister affirmed that the roundtable’s theme encapsulated the administration’s vision of transforming challenges into opportunities and delivering tangible progress to every Nigerian.