According to Sam Amadi, former chairman of the Nigerian Electricity Regulatory Commission (NERC), the Federal Government may terminate the subsidy in order to lower the cost of electricity for consumers who continue to owe debts.
Amadi made this statement on Saturday when he made an appearance on Channels Television’s Sunrise.
“Yes, the Federal Government[/…]would likely eliminate the electricity subsidy.” The Federal Government can grow envious, he said.
“Oh, our tariff is low, we are doing better,” if some states are blatantly claiming that. As a fiscal authority, the Federal Government can say, “You know what?” Why should we be responsible for “looking bad”? Amadi continued.
He did, however, claim that the government should not proceed right away because developed nations also use subsidies for their citizens’ energy consumption.
Amadi said, “There is a significant, emotive debate; most economists just hold the ideological view that subsidy is bad. That is not accurate. As you can see, a market is always a source of subsidy. The question is: How much money is provided by you, where is it put, and why?
“Look at Europe, look at the EU, and look at all of these nations,” the phrase means. Because they needed to switch from one energy source to another, they actually receive significant subsidies for energy because of the crisis in Russia or Ukraine.
“Subsidy is always present,” he says. When Canada and Ontario switched to renewable energy, there was a lot of subsidy to ensure that the cost was manageable. Therefore, the economics that says a subsidy is false is incorrect.
The Federal Government can then respond, “This is the amount of subsidy we can put, and this is how we can put it. “
He also raised questions about corrupt practices and the country’s regulatory frameworks.
We have not utilized our regulatory tools, either. The Power Consumer Assistance Fund is mentioned in the Electricity Act. He said that finding out who needs that fund now requires extensive desktop research.
You need good data, Amadi said. DisCos offer subsidies. They can increase energy efficiency and offer a discount on energy, which is what they do. The subsidy is that. Therefore, there ought to be subsidies. When we increase the number, the question is always: do we cover up corruption in the name of subsidy?
“We also refer to the financial consequences as subsidies.” For instance, if we devalue your currency and then your debt increased to 700 billion as a result, your debt will increase. You now claim to be receiving 700 billion in subsidies. That is not accurate.
1 , 949 bn Subsidy Tariff Shortfall
According to information compiled from the newly released 2024 Annual Report of the Nigerian Electricity Regulatory Commission, the Federal Government’s total gross electricity subsidy tariff shortfall for the power sector totaled 1,949 billion in 2024.
According to the data, a lower-than-cost-reflective tariff, as calculated for the year being reviewed, led to the ensuing debt.
On Friday, President Bola Tinubu made an appeal to power generation companies (GenCos) to give the Federal Government more time to finish verifying and validating their long-standing debts.
The President assured the Association of Power Generation Companies that Col. Sani Bello (retd) would continue to work with them at the Presidential Villa in Abuja informing them of his administration’s commitment to addressing the power sector’s liquidity problems.
Tinubu made a pledge of honesty and fairness in resolving the issues that had previously been left by previous governments.
Source: Channels TV
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