Touted as revolutionary by some and seen by supporters as decisions only tough leaders can make, eliminating subsidy on petrol and the opaque foreign exchange system were hailed on the current government’s assumption of office. Now, subsidy has again reared its head big time in the electricity sector.

Yesterday’s announcement by Sanusi Garba, the Chairman of the Nigerian Electricity Regulatory Commission (NERC) power sector regulatory agency that the government was going to subsidise electricity to Nigerian homes and their business by as much as ₦1.6trillion annually must have come as shock. Power supply is at best poor as majority of Nigerians and their businesses provide their own power in the main; public power supply is an alternate source. The new subsidy regime is reminiscent of the fraud tainted and opaque petrol subsidy that was scrapped last May.

According to the chairman: Government has decided for now, arising from the cost of living crisis and so many others, to in the meantime continue to subsidise electricity. In the new tariff order just published by the commission, you will discover that tariff is not going up but you will see what the Electricity Distribution Companies (DisCos) should be charging. You will also see in the tariff order the amount of subsidy the government will be providing to cover the gap between what they will charge and what they are allowed to charge.

Nigerians have long lost hope the power sector, which was largely privatised in 2013, will deliver uninterrupted electricity. The process was held up as similar to the telecoms sector that saw new entrants in 2001, and has largely driven the successes in many other sectors of the economy, with more than 200million connected lines and tens of millions of internet subscribers.

ALSO READ: Renewables in villages likely to end deep emotional bond with petrol subsidy

The euphoria that followed the privatisation quickly evaporated as it turned out that the new owners of the power distribution companies neither had the technical expertise nor the financial capacity to meet the demands of their licences. It has been tales of woe. While Nigerians are paying more for electricity as a result of hike in tariffs, they are still buying petrol and diesel at higher prices to provide electricity.

The DisCos are reported to be the major clog in the electricity ecosystem. Transmission, which is wholly owned by the government, frequently experiences total collapse, leading to nation-wide blackouts, sometimes lasting days. The GENCOs (power generation companies) barely generate 4,000MW combined. Nigeria has been stuck around this figure for more than 10 years.

The touted reforms in the petroleum and FOFEX sectors have saved about ₦8trillion, claims Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee at the Lagos Chamber of Commerce and Industry 2024 Economic Outlook and Budget Analysis. The Nigerian people made sacrifices as a result of the fuel subsidy removal of the government; that is ₦4trillion savings a year. We did naira floatation. It is not perfect. We are also saving another ₦4trillion. So, we are having about roughly ₦8trillion transferred from the private pockets of the people to the government.

Although the savings have not had any impact on the increasingly worsening living conditions of Nigerians, another subsidy frontier in trillions of naira is about to open up in the power sector.

Meiza Nigeria