Tariff hike: FG plans N1.5tn savings, 2.5m meter installations

The Federal Government has raised the amount that it would save this year following the recent hike in electricity tariff for Band A customers to N1.5tn.

It also stated that about 2.5 million meters would be installed this year in a bid to bridge the metering gap across the country and ensure consumers pay the right amount for electricity.

On April 2, 2024, the Special Adviser to the President on Information and Strategy, Bayo Onanuga, stated that the move by government to withdraw electricity subsidy from 15 per cent of power consumers in Nigeria would save the government about N1.1tn annually.

Onanuga had said the President Bola Tinubu-led administration was poised to allow the price hike in electricity given its N450bn budget for energy subsidies in 2024. ⁣

But in a document on issues around the tariff hike, from the Federal Ministry of Power on Wednesday, which was made available by the media aide to the power minister, Bolaji Tunji, the government said it would save N1.5tn with the recent tariff adjustment.

It said, “FG (Federal Government) to save N1.5tn with tariff adjustment. FG still subsidising Bands below A. Pricing change will help improve liquidity to the NESI (Nigeria Electricity Supply Industry).

“Discos (power distribution companies) will be sanctioned for supplying less than 20 hours to Band A consumers.”

Last week, manufacturers and the organised labour had kicked against the hike in tariff payable by about 1.9 million consumers, which was approved and announced by the Federal Government on April 3, 2024.

Subsidy on electricity was withdrawn completely from the tariff of consumers on the Band A category, which constitute about 15 per cent of the total 12.82 million power consumers across the country.

The government announced the hike in electricity tariff at a press briefing in Abuja by the Nigeria Electricity Regulatory Commission, adding that those affected would pay N225 per kilowatt-hour, up from the previous rate of N68/kWh, representing about 240 per cent increase.

The government stated that the decision took effect on April 3, 2024, adding that Band A customers would enjoy up to 20 hours of power supply daily. However, there were several oppositions against the increase in tariff.

Meanwhile, the power ministry stated on Wednesday that the target of the Federal Government was to meter about 2.5 million unmetered power users across the country annually.

“The Presidential Meter Initiative aims to install a minimum of 2 – 2.5 million meters yearly within the next five years,” it stated.

A September 2023 report by NERC showed that out of the total 12,825,005 registered electricity customers in Nigeria, only 5,707,838 had meters, indicating that over 7.1 million registered customers were still subjected to the estimated billing system.

To close this gap, the Federal Government established the Presidential Metering Initiative, which was announced by the Minister of Power, Adebayo Adelabu, at a briefing in Abuja.

Adelabu had put the metering shortfall at about eight million, but stressed that the Federal Government was committed to eliminating estimated billing by the end of 2024 and close the gap within the space of three to five years, through the new initiative.

“Citizens are tired of estimated billing because it always leads to cheating between consumers, staff and company. Before the end of this year, we are looking at the possibility of ending estimated billing because we want transparency and objectivity in our billing system.

“We have up to eight million metering gap in Nigeria and what the initiative seeks to achieve is to close this gap within three to five years. This means that an average of two million meters are required on a yearly basis and achieving the target is compulsory for citizens to enjoy stable power supply,” the minister had stated at a briefing in Abuja.