Electricity subsidy for rural consumers uncertain, says govt

Mr Babatunde Fashola

Mr Babatunde Fashola

16 December 2015, Abuja –  The federal government has said that the possibility of providing some level of financial subsidy for electricity consumers in Nigeria’s rural communities remains uncertain due to its lean pockets.

This is coming as the Nigerian National Petroleum Corporation (NNPC) targets to complete some critical gas infrastructure to ease gas supply to associated power plant to generate additional 2,000MW within the next 15 months, subject to budgetary provisions.

Minister of Power, Works and Housing, Mr. Babatunde Fashola said in Abuja that the decision to continue with subsidising consumption of electricity by rural communities in the country would be a tough choice for the government to make.

Fashola however, added that the government was already considering recommendation on what would work for it going forward in this regard.

The federal government had from inception of the power sector privatisation programme, provided some pool of fund to subsidise electricity consumption by rural citizens of the country. The measure was aimed at helping the new operators recover cost of distributing electricity to rural communities who would find it difficult to pay the cost-reflective bills given to them by the electricity distribution companies.

But Fashola said: “It was necessary to privatise, no doubt. The previous administration has made some choices – not all those choices have worked, and not all those choices have been completed. Some require re-evaluation. One of them is subsidy to the rural areas. Was it the best choice to make under the circumstance? Is there a subsidy in other services in the rural areas? Can the economy carry it along with other subsidies, because we also want subsidy for housing, we have subsidy for fuel, essentially we have subsidy on roads. Can this economy absorb all of that? Will it work better if everybody begins to pay for what it uses? Those are tough choices but they have to be made. Are they going to work that way? So, those are the things we are still looking at and make our own recommendation on what will work and not work,” he added.

Similarly, the minister said that the government would be pushing for more volumes of electricity to be generated into the national grid.

On this, he stated that subject to budgetary provisions, the NNPC will complete some critical gas infrastructure to ease gas supply to associated power plant to generate additional 2,000MW within the next 15 months.

Fashola equally noted that apart from stable supply of gas to power plants, other issues such as environmental concerns and appropriate pricing for gas would be approached with dispatch by the government.

He said that the recent review of gas from $1.30 per unit to $3.30, which is still below the $4.00 international market price, would be revisited to help solve the challenges of gas supply to the power sector.

On electricity tariff which has become quite contentious in the country, the minister requested that Nigerian give to the new government some benefits of doubts on its intention and drive for fair electricity pricing in the country.

“Give us the benefit of doubt and accept whatever tariff that comes out of the ongoing negotiations. The market will eventually plateau and tariff will find its commercial value. Opposition to tariff will ensure that we don’t have power,” he added.


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