In a significant development, the Bola Tinubu-led federal government has announced its intention to cease subsidizing electricity, as disclosed by the Minister of Power, Adebayo Adelabu, during a press conference in Abuja on Wednesday, February 14. Adelabu emphasized that Nigeria cannot sustainably continue subsidizing electricity and must transition towards a cost-effective tariff model to ensure long-term viability.
Highlighting the financial challenges, Adelabu revealed that Nigeria currently carries a significant debt burden, owing 1.3 trillion naira to generating companies (GenCos) and 1.3 billion dollars to gas companies. Despite budgeting 450 billion naira for subsidy this year, the ministry estimates a requirement of over 2 trillion naira to adequately subsidize electricity.
In response to the pressing energy needs, Adelabu announced that state governments would be permitted to independently generate power to supply their respective states. Additionally, addressing recurring grid collapses, he cited factors such as gas shortages, aging infrastructure, low evacuation capacity, and damage to power stations in the North-East region.
The Transmission Company of Nigeria’s stalled projects, totaling over 100, were attributed to fluctuations in forex rates, prompting the ministry to withhold awarding new contracts until ongoing projects are completed. Moreover, with a focus on rural electrification, the 2024 budget allocates over 50 billion naira for constructing mini-grids in remote areas. Adelabu also issued a stern warning to electricity distribution companies, stating that non-compliance would result in license revocation, and enlisted the support of the National Security Adviser to safeguard power infrastructure.
