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Thursday, 22 February 2024 05:21

Senate rejects electricity tariff hike - probes N2tn subsidy

The Senate has kicked against plans by the Ministry of Power to approve the proposed hikes in electricity tariff by Distribution companies.

The Senate also rejected plans to remove electricity subsidy given the present hardships in the country.

The Senate then called on the government to step down the idea of an increase in electricity tariff.

The upper chamber also directed the committee on power to investigate the N2tn required for electricity subsidy payment, other debts owed in the sector, and the state of metering in the country.

The resolution of the Senate followed its consideration and approval of a motion moved by Senator Aminu Abbas (PDP, Adamawa Central) during plenary on the need to retain subsidy on electricity in the country for the foreseeable future.

Last week, the Minister of Power, Adebayo Adelabu, disclosed at a press conference in Abuja that Nigeria was not likely to sustain the current electricity subsidy payment.

He explained that the indebtedness of the country’s power sector to electricity-generating companies (GenCos) and gas companies (GasCos) had risen to over N3tn.


He said, “Today, we owe a total of N1.3tn to the power generating companies, out of which 60 per cent is owed to gas suppliers. Today we have a legacy debt, before 2014, to the gas companies of $1.3bn; at today’s rate, that is close to N2tn.”

Sunday PUNCH had reported the spokesperson of the Senate, Yemi Adraamodu, as saying that it would not allow any hike in the price of electricity that might add to the woes of Nigerians.

Abbas in his lead debate said the “Senate notes with greatest dismay the plan to increase electricity tariff by the relevant statutory authority in gross disregard of increased economic challenges with attendant widespread poverty and high cost of living.”

He added, “The Senate may note that the Hon. Minister of Power was reported saying ‘the nation must begin to move towards a cost-effective tariff model, as the country is currently indebted to the tune of N1.3tn naira to generating companies (GenCos) and $1.3bn owed gas companies.

“According to him, over N2tn needed for subsidy, only N450 billion was budgeted this year. The same electricity businesses are collecting money from customers for services not rendered. When they have not added anything to the equipment, they inherited it from PHCN.

“Communities buy transformers to replace damaged ones in addition to overburden bills and arbitrary estimates for unmetered customers.”

Senator Abbas further stated, “Cognizance that in a country where a greater population live below the poverty level, with stagnant wages, rising inflation and depreciating currency, the prospect of higher electricity bill is unattainable.


“The issue of arbitrary energy charges on unmetered customers has become worrisome given the February 2024 report of the Nigerian Electricity Regulatory Commission on the non-compliance with energy billing caps by DisCos and the penalty of N10.5bn imposed on the distribution companies that over-billed its unmetered customers.

“Aware that in 2018, the then Hon. Minister of Power, Works, and Housing directed the Nigerian Electricity Regulatory Commission to issue a regulation that facilitates signing of meter agreements between the Federal Ministry of Power, Works and Housing, Ziglaks company and other meter asset providers to address the metering gaps in the power supply industry.”

He further noted, “Further aware that as far back in 2020 the president then, ordered the Nigerian Electricity Regulatory Commission to commence Mass pre-paid Metering to end estimated billing, and that Funds were released to that effect

“Disturbed that the multiple sanctions declared to be imposed by NERC against DISCOs for failing to comply with the scrapping of estimated bills for unmetered customers which include credit adjustments to overbilled unmetered customers for the period January – September, 2023 by the March 2024 billing cycle, publication of the list of credit adjustment beneficiaries in two national dailies, and deduction of N10,505,286,072 from the annual allowed revenues of the eleven DisCos during the next tariff review seemed to have been in futility given the continued violations by Discos.”

It would be recalled that this Senate via a motion called on the Federal Government and NERC not to increase tariff on electricity for customers and citizens of this country at this time.

Abbas further noted, “Regret that in addition to the high cost of living being experienced in the country, the unmetered customers who are owners of small and medium enterprises are adversely impacted by this level of exorbitant electricity charges and by implication have their businesses affected.

“While the prospect of the new Electricity Act, 2023 of ensuring accurate electricity charges will be negated if DisCos are not investigated to ascertain the current statistical data on unmetered customers, poor provision of electricity service despite exorbitant tariff and regulatory role of NERC which leaves much to be desired.”


Contributing to the debate, Senator Aminu Tambuwal, (PDP, Sokoto South) said it was abnormal for the government to “consider hiking electricity tariff in the face of hardship,” stressing that “such action should not even be contemplated in the first place.”

Similarly, Senator Orji Kalu, (APC, Abia North), noted that even advanced economies subsidise electricity.

He said, “Why should people be paying for what they did not use? Our focus should be on transmission and distribution.”

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