Financial Objective: FG Eyes N1.5tn Savings, 2.5m Meter Installations through Tariff Hike

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FG Eyes N1.5tn Savings, 2.5m Meter Installations through Tariff Hike

The recent hike in electricity tariff for Band A customers is expected to result in significant savings for the Federal Government, with an estimated amount of N1.5 trillion to be saved this year. This adjustment in tariff, which withdraws electricity subsidy from 15% of power consumers in Nigeria, is part of the government’s efforts to improve liquidity in the Nigeria Electricity Supply Industry (NESI).

According to Bayo Onanuga, the Special Adviser to the President on Information and Strategy, the decision to withdraw electricity subsidy from Band A consumers is projected to save the government about N1.1 trillion annually. However, a document from the Federal Ministry of Power, made available by the media aide to the power minister, Bolaji Tunji, indicates that the actual savings from the recent tariff adjustment could be even higher at N1.5 trillion.

The tariff adjustment affects approximately 1.9 million consumers, who will now pay N225 per kilowatt-hour, marking a significant increase from the previous rate of N68/kWh. Band A consumers are expected to receive up to 20 hours of power supply daily.

In addition to the tariff adjustment, the government is also focused on addressing the issue of metering across the country. The Presidential Meter Initiative aims to install a minimum of 2 to 2.5 million meters annually over the next five years. This initiative seeks to eliminate the estimated billing system, which currently affects over 7.1 million registered electricity customers in Nigeria.

The Minister of Power, Adebayo Adelabu, has emphasized the importance of closing the metering gap to ensure transparency and objectivity in the billing system. With an estimated metering shortfall of about eight million, the government is committed to ending estimated billing by the end of 2024 and closing the metering gap within three to five years through the Presidential Meter Initiative.

Overall, these measures are aimed at improving efficiency and transparency in the electricity sector while ensuring that consumers pay the right amount for electricity consumed.

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