Barely a year after scrapping a costly gas subsidy, the Nigerian government announced plans to cut its electricity subsidy program. This decision is likely to lead to an increase in electricity tariffs for consumers, sparking concerns about affordability for many Nigerians.
Presidential spokesperson Bayo Onanuga made the announcement on Tuesday, stating that the current cost of the subsidy program, estimated at N3.3 trillion (US$2.5 billion) annually, is unsustainable. The government proposes to reduce the subsidy for some consumers, estimated to be around 15 percent.
“With the huge subsidy burden and high cost of gas, the current electricity tariff is not realistic,” said Onanuga. The proposed increase would help electricity distribution companies recover costs and boost investment in the sector, he added.
The Nigerian Senate previously rejected a similar proposal from the government, citing concerns about the impact on already struggling households. The high cost of living in Nigeria, including rising inflation, fuels anxieties about the ability of many Nigerians to afford higher electricity bills.
Yet, the government maintains that the subsidy reduction is necessary to improve the efficiency of the power sector and attract further investment. Onanuga did not say exactly when the tariff increase will take effect or by what percentage electricity prices might rise, but he said that when it did the government expected to save close to N1.1 trillion (US$8 million) per year.
—Ezinwanne Onwuka reports for TruthNigeria from Abuja.
