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Current policy doesn’t allow for a cost-reflective tariff
- World Bank projects tariff shortfall to rise by 2023
- The government may require ₦3.4trn to fund the tariff shortfall
The World Bank has raised the alarm on the rising tariff shortfall gap. According to the global bank, the shortfall resulting from the lack of a cost-reflective tariff may rise to ₦3.4trn by 2023. The World Bank made this known at a virtual media workshop.
Mohammed Wakil, Senior Energy Specialist in his presentation at the workshop, stated that, without an improvement in the performance and discipline of market participants, the government might, in the long run, have to make up for the shortfalls in the sector. He added that Nigeria losses $29 billion annually to unstable and unreliable electricity supply.
While speaking on electricity subsidies, Wakil stated that government subsidies initially meant to help the poor afford electricity are more beneficial to the rich. “The Government for years was paying the difference because the Government wanted to help poor Nigerian families to pay their bills. But richer families use more electricity, so a big chunk of Government support ends up going to those who do not really need help with paying bills,” he said.
The Power Sector Recovery Program (PRSP), according to Wakil, is a comprehensive approach to solving the nations electricity problems. So far, the World Bank has provided $1.25 billion in funding to the Federal Government under the PSRP.