FG Moves to End Electricity Tariff Subsidy Burden, Power Minister Says
The Federal Government has said it can no longer continue covering electricity tariff shortfalls while striving to provide reliable power supply to Nigerians.
Minister of Power Joseph Tegbe made this known at an energy conference organised by the Harvard Business School Association of Nigeria in Lagos on Friday, where industry experts discussed the challenges facing the country’s electricity sector.
Tegbe identified poor revenue collection, inadequate metering, mounting debts owed to power generation companies and structural weaknesses in the electricity market as major obstacles to reliable electricity supply.
He argued that commercially sustainable electricity tariffs would only be effective if distribution companies could collect payments from consumers and ensure that suppliers received their money.
“Commercially viable pricing will work where the supplier can actually collect his money and get paid. There’s no sense in commercially viable pricing if you don’t collect money,” the minister said.
He disclosed that the government was reviewing the structure of the electricity market and existing tariff assumptions in collaboration with the Nigerian Electricity Regulatory Commission (NERC).
The minister also questioned the continued operation of the Nigerian Bulk Electricity Trading (NBET) model, under which the government-owned company purchases electricity in bulk from generation companies before selling it to distribution companies.
According to Tegbe, the model should have been phased out several years ago, adding that the government intended to transition away from it.
“NBET ought to have been sunset about five years ago, and I’m telling you my own plan, at the end of the day, is to move from that model. That model will not help Nigeria. We can’t keep covering tariff shortfalls and think we’ll give power to every Nigerian,” he said.
Tegbe added that the government was considering a transition towards bilateral electricity agreements, which would allow power generators and eligible buyers to negotiate electricity supply arrangements directly.
The proposed shift comes amid persistent concerns over electricity financing, market liquidity and the ability of power sector operators to deliver a more reliable supply to consumers.
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