Electricity Subsidy: FG to Spend N110bn in 2 Years

Minister of Power, Barth Nnaji

By Chineme Okafor  

Minister of Power, Prof. Barth Nnaji, has said that the Federal Government has budgeted about N110 billion for subsiding of electricity consumption of Nigeria’s rural population in the next two years.

Giving a breaking down of the expected distribution, Nnaji explained that the government had  plan to spend N60 billion on electricity subsidy in the 2012 budget and another N50 billion in next year’s on rural dwellers and the urban poor, including most individual consumers who fall into the category R2 tariff plan as contained in the new Multi Year Tariff Order 2 (MYTO 2).

Delivering a paper at the 2012 Aret Adams’s Annual Lecture Series held at the Nigerian Institute of International Affairs (NIIA), Lagos, where he spoke extensively on the state of Nigeria’s infrastructural development, Nnaji who reacted to recent media reports of extreme hike in electricity tariff said: “In reporting the planned adjustment, however, a section of the media has gone for the sensational with screaming headlines like “Electricity Tariff to Increase by 88 percent in April”.

There has been little effort to report the N60 billion subsidy in this year’s budget and the N50 billion in next year’s for rural dwellers and the urban poor, as well as most individual consumers who fall into the category called R2.”
Nnaji noted that: “Those who will notice significant adjustments in tariff are high-end users. Even so, what they will be paying is a fraction of what they spend currently on self generation, which the Manufacturers Association of Nigeria (MAN) puts at over 4000 megawatts. Indeed, various surveys have shown that the Nigerian people would not mind paying a little higher if power supply is guaranteed.”

According to the minister, Nigeria is in dire need of infrastructural renewal, upgrading, modernisation and expansion.
He added that of all the infrastructural facilities in need of radical development, electricity stood out considering that the quantum of power consumed in a country by the citizens is considered a good indicator of the country’s socio-economic performance.

“Brazil, a developing nation of some 200 million people, generates 100,000 megawatts while Nigeria, a country of 167 million, produces a mere 44000 megawatts. It is, therefore, not surprising that the epileptic character of Nigeria’s power supply is often cited as the most critical factor for the seeming de-industrialisation of the country, which has in recent times seen hundreds of textile firms collapse and multinationals like Michelin and Dunlop leave Nigeria,” Nnaji said.

He emphatically stated: “Our dear country will never realise its potential unless the electricity question is addressed, like other infrastructure issues. Good a thing that the Jonathan administration is acutely conscious of this fact, and has taken far-reaching steps to end the infrastructure blight. The world has long waited for Nigeria. It may not be far from now when Nigeria can wait for the world.