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April 11, 2024
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FG plans N1.5tn savings, 2.5m meter installations amid tariff hike

The Federal Government has recently made significant adjustments in electricity tariffs for Band A customers, aiming to save a substantial amount totaling N1.5 trillion this year. Additionally, plans are underway to install approximately 2.5 million meters across the nation to address the metering gap and ensure accurate billing.

In an announcement on April 2, 2024, Bayo Onanuga, the Special Adviser to the President on Information and Strategy, highlighted the decision to withdraw electricity subsidies from 15% of power consumers, estimating an annual saving of N1.1 trillion. The administration, led by President Bola Tinubu, justified the tariff hike in light of its N450 billion budget for energy subsidies in 2024.

A document from the Federal Ministry of Power, disclosed by Bolaji Tunji, the media aide to the power minister, emphasized the potential N1.5 trillion savings resulting from the recent tariff adjustment. The government clarified that while subsidies continue for consumers below Band A, the pricing change aims to enhance liquidity within the Nigeria Electricity Supply Industry (NESI). Power distribution companies failing to provide at least 20 hours of electricity to Band A consumers will face sanctions.

However, opposition to the tariff hike emerged from manufacturers and organized labor, particularly concerning the increase payable by approximately 1.9 million consumers. The withdrawal of electricity subsidies was applied exclusively to Band A consumers, constituting around 15% of the total 12.82 million power consumers nationwide.

Effective April 3, 2024, Band A customers are expected to receive up to 20 hours of daily power supply. Despite this initiative, objections persisted against the tariff adjustment.

The Federal Government aims to address the metering gap by targeting approximately 2.5 million unmetered power users annually through the Presidential Meter Initiative. As of September 2023, only 5,707,838 out of 12,825,005 registered electricity customers possessed meters, leaving over 7.1 million subjected to estimated billing.

Minister of Power, Adebayo Adelabu, introduced the Presidential Metering Initiative in September 2023, acknowledging a metering shortfall of about eight million. The government pledged to eliminate estimated billing by the end of 2024 and bridge the gap within three to five years through this initiative, ensuring transparency and objectivity in billing processes and ultimately providing stable power supply for citizens.

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