The federal government says there are plans to gradually move towards a cost-reflective electricity tariff.
Adebayo Adelabu, minister of power, disclosed this on Monday, according to Bolaji Tunji, special adviser on strategic communication and media relations.
He said the industry would gradually move towards fairer pricing.
“There would not be a gradual removal of subsidy but a gradual migration to a cost reflective tariff that will last till the next three years,” the minister said.
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On February 15, the minister said it is difficult for the federal government to continue to subsidise electricity.
Adelabu said Nigeria’s debt to generation and gas companies is now N3 trillion.
According to Adelabu, the country owes N1.3 trillion to generating companies (GenCos) and $1.3 billion to gas companies, so Nigeria must begin to move towards a cost-effective tariff model.
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Also, the minister said over N2 trillion is needed to subsidise electricity in 2024, however, N450 billion was budgeted for subsidy.
On February 21, the senate called on the federal government to drop the plan to remove subsidy on electricity and asked its committee on power to probe the debt claim made by Adelabu.
This was after Aminu Iya Abbas, senator representing Adamawa central, and 10 others sponsored a motion against removing electricity subsidy.
Meanwhile, the International Monetary Fund (IMF), on February 12, asked the federal government to phase out electricity subsidy.
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IMF said electricity subsidy is costly and does not benefit those who need government support the most.
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