A Review of the Nigerian Energy Industry

Nigeria: No provision for electricity subsidy in 2014 Budget

Prof Chinedu Nebo02 January 2013, Abuja – The Federal Government didn’t make provisions for subsidy to low income consumers of electricity in the 2014 budget just as the current subsidy would expire on the termination of the 2013 budget.

Speaking recently on the subsidy renewal, the Chairman of the Nigerian Electricity Regulatory Commission (NERC), Dr. Sam Amadi, said the subsidy only had 2- year working period. He said the subsidy was not reflected in the current budget, explaining that it could only do so through a supplementary budget in 2014.

Recall that government budgeted about N110 billion in 2012 on electricity consumption subsidy for the next two years which would elapse in December 2013. A breakdown of the subsidy distribution indicated that government was to spend N60 billion for electricity subsidy in the 2012 budget and another N50 billion in the 2013 budget.

Earlier in October, the General Manager, Government and Consumer Affairs Division, Dr.Tony Akah, who spoke on behalf of NERC Chairman, Dr. Sam Amadi, at a Power Consumers Assembly (PCA) in Onitsha, Anambra State ,noted that the commission recommended that the Federal Government stopped the subsidy following the privatisation of PHCN utilities.

“In the new tariff that we have, the MYTO-2, there is a component of subsidy because what Nigerians are paying now is not the full cost and because we don’t want the consumers to have a big shock, the regulator made recommendations to the government and they accepted and provided some funding,” he explained.

He said that the government in its disposition in the post privatisation era may stop the subsidy of low income consumers in Residential 1 and 2 (R-1 & 2) and Commercial 1 (C-1) cadres, starting from 2014, adding that, such subsidy funds will, thus, be channelled into other priority areas, including provision of electricity to Nigeria’s rural communities in line with government’s rural electrification programme.

Dr. Akah maintained that government is expected to run out of its outlay for subsidising consumers on implementing the 2014 budget and, as such, it may not provide more funds if there was no need to continue with it.

Energy experts have urged electricity consumers across the nation to brace up for likely increase in tariff in the new year if the supplementary budget fails to accommodate subsidy provision.


– Daily Trust

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