Adelabu hints at power tariff review, says Band B customers underpaying

Adebayo Adelabu, minister  of power, says electricity consumers on Band B are not paying enough and may soon have to pay more.

Adelabu spoke on Thursday at the public presentation of the national integrated electricity policy (NIEP) and the Nigeria integrated resource plan (NIRP) in Abuja.

On April 3, 2024, the federal government approved an increase in electricity tariff for customers under the Band A classification, while other bands were unchanged.

Under the current structure, Band A customers are entitled to a minimum of 20 hours per day, Band B gets a minimum of 16 hours of power, and 12 hours for Band C.

While category D receives a minimum of eight hours, Band E gets four hours of electricity per day.

Following the price review, Band A customers began paying N209 per kilowatt-hour, while Band B — with three to four hours difference in electricity supply — pays N63 per kilowatt-hour.

Speaking at the event on Thursday, Adelabu said the government might cancel some sections of electricity consumers classification to make it only three bands: A, B and C.

The minister said the disparity between Band B, which receives a maximum of 18 hours, and Band A, with a minimum of 20 hours, is too wide, stressing that the bands should be regularised.

He added that the government had anticipated a faster migration to Band A, but discovered that distribution companies (DisCos) refused to invest in their networks.

“They have refused to invest in this sector. Fine, it can be explained in a way, but a lot of investment is required for us to achieve an accelerated migration of lower band customers into Band A. It is taking a lot of time,” Adelabu said.

“We’re now looking, okay, what can we do? Let’s even look at other bands, which is B to E. Let’s go now to the bands to A, B, and C… because the gap between the Band A tariffs and the Band B, Band C, D, and E is just too wide. 

“It’s just too wide. And a Band B that’s enjoying 18, 17 hours is paying N63.

“One that’s enjoying just 20 hours, two hours difference of supply, is paying N209. So we believe it’s not fair. It is not just. And we must be able to carry out some level of regularisation.”

The minister further said it is not a tariff increase, “because tariff would never go beyond what Band A is paying”.

“But we need to regularise internal regularisation of the tariffs among the existing bands,” he said.

“Try to be fair, it will be just, and it will come with minimal noise because a lot of Band A customers will say, downgrade us to Band B. If Band B can be getting 16, 17 hours. Then they also pay something close.

“Nobody will come and say, ‘downgrade me to Band B again’. So we are just trying to juxtapose the numbers and also engage. 

‘We are not announcing any increase in lower band tariffs yet. If we want to do that, everybody will be carried along. I want to do proper engagement, and we know that it’s a joint sectoral agreement. Not just that, oh, the minister has announced, or the Chairman of NERC has announced. 

“No, it will not happen like that. But we are reviewing the situation. Then, the subsidy implementation.”

Adelabu explained that the planned move would lead to a reduction in tariff differentials and enable those in the lower bands to enjoy more hours of electricity.

The minister also said the migration of some customers to Band A resulted in a 70 percent increase in revenue for the power sector, from N1.05 trillion last year to approximately N1.7 trillion.

LOW INVESTMENTS BY DISCOS 

Adelabu further said DisCos have continued to fail to invest in the sector, adding that with requisite investment by the firms, more progress would have been achieved.

Adelabu also said the inflows attracted by the power sector last year were better than they were in 2023.

He added that their unwillingness to expand their distribution networks partly explains the low “migration of more customers to Band A”.

Speaking further, Adelabu said the NIEP and NIRP documents, which have been approved by President Bola Tinubu, might be ratified by the federal executive council (FEC) on Monday.

“It is a major one for us in the sector, and we are happy that we have submitted this for the approval of the Federal Executive Council,” he said.

“I can assure you that by next week, Monday, at the next FEC, it will be approved.’’

The minister also said the government would no longer support electricity subsidy payments, and that a re-evaluation of the current electricity tariff was likely.

He, however, said such decision would not translate to an immediate tariff hike.