FG: N120bn Spent on Subsidising Electricity Consumers in 2022
•Begins repayment of N100bn debts owed Discos by MDAs
•Says next phase of 4m meters distribution to commence in Q1
•Tariff collection rises to record N80bn in December
Emmanuel Addeh in Abuja
The federal government yesterday said it paid N120 billion in 2022 subsidising electricity consumers in selected bands, including C,D and E, down from a N552 billion peak before the Muhammadu Buhari administration took over.
The Special Adviser to the president on Infrastructure, Mr Ahmad Zakari, who spoke during a programme on Channels Television, while defending the state of the sector, maintained that it was in a coma when Buhari assumed office in 2015.
But the new disclosure varies significantly from comments by the Minister of Finance, Budget and National Planning, Zainab Ahmed, on March 11, 2022, that the federal government had ‘quietly’ removed ‘all’ subsidies in the power sector.
“We have been able to quietly implement subsidy removal in the electricity sector and as it is, as we speak, we don’t have subsidies in the electricity sector,” Ahmed had revealed.
But in what appeared like a contradiction, the presidential aide noted that although the sector needs to be built to be commercially viable, government paid N120 billion as subsidy last year targeted at the lower bands.
According to him, the subsidy has remained as a buffer for not just the poor and vulnerable but to ameliorate the impact of gradual increases in the electricity tariffs.
“The government actually continues to subsidise citizens in bands, C, D and E which is where most of our areas that don’t receive power and our less affluent ones are.
“ I think some people have tried to ‘weaponise’ tariffs politically. We must have a electricity sector that’s built on commercial pragmatism and we must use our limited resources to subsidise the citizens that need that subsidy. And we continued to do that last year. We spent N120 billion last year subsidising our lower bands,” he stated.
Zakari noted that when the APC government assumed office, there was no national scalable metering programme and policy on renewable energy, which he said are now in place.
“When the All Progressives Congress (APC) administration came, the sector was in a coma. We had ballooning subsidies of N552 billion at its peak and it was approaching N1 trillion,” he contended.
He added that before Buhari, there was what he described as ‘crony capitalism’, where Distribution Companies (Discos), as well as other assets were either sold to people that were not capable to manage them, or contractors that couldn’t execute them.
But now, Zakari noted that over 4 million meters will be distributed in the next phase of the ongoing National Mass Metering Programme (NMPP), even with 1 million units already deployed in the initial phase of the programme.
“President Buhari actually withheld some funding that was available from the World Bank for a short period of time to allow us to restructure the Discos and we have a World Bank facility that will fund another 1.25 million metres.
“So, what I would say is we know the gap when we started was about 9.8 million meters. One million has been done by the first phase of the national mass metering programme.
“Another 4 million will be done by the second phase, which should commence shortly. Then another funding for 1 million has been secured and procurement will commence. It should start this first quarter before March,” he explained.
Still on the state of the sector, Zakari said eight out of the 11 distribution companies that were sold to ‘incapable’ investors have now been restructured by the current administration.
According to him, in December the sector recorded its largest collections in the history of the Nigerian power sector whereby N80 billion was received.
He explained that the ongoing local production of meters was to make sure new build meters were manufactured in Nigeria, as 41 companies are now in the process , thereby creating thousands of local jobs.
He argued that the last outcry surrounding the tariff adjustment was not uniform, stressing that in some areas, the tariffs had decreased for some electricity consumers.
“But you also have the providers of that electricity that have some other factors changing. When you say tariffs, it’s a bit of a misnomer in today’s world. Because we have multiple Discos, multiple tariff bands, and there’s no one resolution. There are locations that have experienced tariff reduction.
“We must have an electricity sector that’s built on commercial pragmatism and we must use our limited resources to subsidise the citizens that need that subsidy,” he opined.
He also stated that there’s now a separate regulation which now proposes that the federal government should offset debts owed by its ministries, departments and agencies.
“If you look into our regulations, there’s actually an offset regulation that was released by the regulator that is allowing Discos to claw back almost N100 billion of MDA debts from federal agencies that have not paid them.
“ And that’s ongoing now. And the ministry of finance and the budget office are funding that repayment,” he revealed.
