Why FG has not approved electricity tariff increase – Adelabu

The Minister of Power, Adebayo Adelabu, has revealed that President Bola Tinubu intervened to prevent a hike in electricity tariff and insisted on subsidising the power consumption across the country.

He made this known at a press briefing in Abuja on Wednesday.

He also said the federal government would look into the legality of the extension of the licences of the privatised power distribution and generation companies by five years, noting that the licences of the firms were supposed to expire on October 31, 2023.

The minister also warned that he would not hesitate to fire any chief executive of the agencies under the power ministry, if they fail to perform and jeopardise his job.

Adelabu, speaking on the issue of cost-reflective tariff, which would increase the power tariff, said the president had demanded that stable power supply must be achieved before implementing the cost-reflective tariff.

“The power sector is an industry that is very sensitive to any leader,” the minister said.

“You cannot jump overnight and implement the cost-reflective tariff. I can tell you that till today the government still subsidises power. Tariff should have been raised months back, but Mr. President said until we are able to achieve regular and incremental power supply we can’t touch the tariff.

“So, there is a gap between the cost-reflective tariff that we are supposed to charge and the allowed tariff. That huge gap the government is still handling it as subsidy. This affects liquidity in the system, investments and causes so many constraints.

“Now, I never said that it is not yet time to charge a cost-reflective tariff. Rather, I said the cost-reflective tariff is supposed to have been implemented months ago because it is the source of liquidity to the system.

“But for political reasons and empathy, you cannot cause additional burden on Nigerians. We just had the removal of fuel subsidy, we are talking about exchange rate skyrocketing, galloping inflation and so many others that bring hardship to the people.

“And Mr. President is trying to relieve this hardship through various forms of palliatives. So it is not politically expedient and reasonable to now implement a tariff that is more like dumping the existing tariff.

“We are now paying about N70 (per kilowatt-hour), and it can never be less than N130 or N140 at the exchange rate of today if we are to implement a cost-reflective tariff. Because part of the reasons for an increased tariff is the price of gas, which is paid in dollars.”

Adelabu said 75 to 80 percent of Nigeria’s power currently comes from gas power plants.

“And their raw material is gas. So, once the exchange rate goes up, the cost of gas also goes up and it affects the tariff,” he explained.

The minister, however, said tariff would be increased at the right time — after a lot of sensitisation and communication with the public — adding that there must also be an assured incremental and regular power supply.

The minister said the current power generation of about 4,000 megawatts in Nigeria is disgraceful and unacceptable, noting that efforts are being made to increase it.

Adelabu stressed that any senior official in the ministry and its agencies who fails to deliver would be fired, as the president had told his ministers that they must perform or be eased out of the cabinet.

“I’m using this medium to tell my colleagues who will work with me that if your activity is not supporting my retention, you’ll leave before me. Because for me, I don’t wait to be sacked, the moment I’m not performing, I’ll leave honourably,” the minster said.

“But before I leave I’ll explore every opportunity to ensure I deliver, because this is not personal, this is national and national interest must prevail.”

He added that all the players in the power sector must “support my vision, so that I can support Mr President’s vision”.