In May 2023, President Bola Tinubu took a bold step by completely removing subsidies on petroleum products. The move was met with mixed reactions, as it disrupted a decades-old system that had both supporters and critics.
Now, a similar storm is brewing in the electricity sector.
The federal government announced that it cannot “continue to sustain electricity subsidy”. The Minister of Power, Adebayo Adelabu said the new development came after N450bn allocated to the power sector for subsidy could not service the ministry demands of over N2trn for subsidy.
This development has left citizens grappling with uncertainty, while the power sector grapples with its challenges.
According to energy statistics from 2023, Nigeria has the lowest access to electricity in the world. Over 92 million people out of the country’s population of over 200 million do not have access to electricity.
In the past three years, the cost of electricity has increased three times. Each time, this has caused significant difficulties for people, without any visible economic benefits for the country. Currently, Nigeria generates less than 3,500 megawatts of electricity, which is an insufficient amount.
Given this situation, it is unclear what guarantee there is that the latest tariff increase from N65 per kilowatt hour to N225, representing a 240 per cent increase, will bring any meaningful change to the situation.
Nigerians now face a double blow with the recent development. While the government aims to improve the power sector through deregulation, many consumers, particularly those under the Band categories like A, B, and C, are expressing outrage. These bands, promised 20, 16, and 12 hours of daily power supply respectively, are reportedly experiencing significant shortfalls, raising concerns about paying for phantom electricity.
The crux of the issue lies in the complex relationship between the Generation Companies (Gencos) and Distribution Companies (Discos). Gencos are responsible for electricity generation, while Discos handle distribution to consumers. The subsidy removal aims to incentivise Gencos to increase power generation, ultimately leading to a more consistent electricity supply. However, the current situation suggests a disconnect, with consumers forced to pay for promised hours of light they are not receiving.
Adding to the frustration is confusion surrounding the band categorisation. Many consumers remain unclear about which band they fall under, leading to further discontent.
Despite efforts to educate the public, confusion persists regarding the band categories. Citizens wonder and the lack of clarity exacerbates frustrations. Some pay for premium service but receive subpar hours, while others remain uncertain about their rightful category.
The Power Minister’s recent statements urging Nigerians to adopt “energy-efficient appliances” and “optimise their energy consumption” have also been met with skepticism.
His advice to use electricity wisely means Nigerians must embrace energy conservation, optimising the limited supply. But how can citizens heed this advice when the supply is not stable? Consumers argue that such measures are secondary when faced with an unreliable power supply.
The government has defended the subsidy removal, citing it as an alignment with international best practices. However, critics point out that successful models in other countries were implemented alongside significant investments in infrastructure and improved service delivery. In Nigeria’s current scenario, the burden seems to fall solely on consumers, raising questions about the effectiveness of the policy
As Nigerians grapple with rising electricity costs and inconsistent power supply, the situation demands a more transparent and consumer-centric approach. Addressing the gap between promised and delivered electricity remains crucial. Open communication with the public, alongside clear explanations of band categorisation and a focus on infrastructure development, are essential steps towards a more equitable and efficient electricity system. Only then can the true benefits of subsidy removal, as potentially aligned with international best practices, be realised.