The Minister of Power, Adebayo Adelabu, declared on Wednesday that Nigeria’s current electricity subsidy model is unsustainable, emphasizing the need to transition towards a cost-effective tariff system. Adelabu revealed that the nation is grappling with significant debts, owing 1.3 trillion naira to generating companies (GenCos) and 1.3 billion dollars to gas companies.
Addressing a press conference in Abuja, Adelabu disclosed that although only 450 billion naira was allocated for subsidy in the current year’s budget, the ministry requires over 2 trillion naira to sustain the subsidy. As a result, the government is compelled to reevaluate its approach to electricity pricing.
Furthermore, Adelabu announced a significant policy shift allowing state governments to independently generate power to meet their states’ needs. This move aims to decentralize power generation and distribution, promoting efficiency and self-reliance at the state level.
Regarding the frequent grid collapses experienced between December 2023 and the present, Adelabu attributed these failures to various factors, including gas shortages, aging grid infrastructure, insufficient capacity to evacuate generated power, and the destruction of power stations in the North-East geopolitical zone.
Adelabu highlighted challenges faced by the Transmission Company of Nigeria (TCN), citing over 100 abandoned projects due to contract variations stemming from forex fluctuations. He declared a halt to new contract awards until existing projects are completed to mitigate financial losses and ensure project accountability.
In a bid to enhance access to electricity in remote areas, Adelabu announced a dedicated allocation of over 50 billion naira in the 2024 budget for building mini-grids to supply power to underserved communities.
Adelabu also issued a stern warning to electricity distribution companies (DisCos), urging them to improve their performance or face license revocation for non-compliance with regulatory standards.
Additionally, Adelabu revealed efforts to bolster security for power infrastructure, disclosing discussions with the National Security Adviser, Nuhu Ribadu, to provide adequate security measures to safeguard critical power assets across the country.
Adelabu’s remarks underscore the challenges and reforms underway in Nigeria’s power sector, signaling a shift towards sustainability, efficiency, and improved service delivery in the nation’s electricity supply system.
