FGN considers Subsidy removal on Electricity in 2014
The Federal Government may have concluded plans to discontinue provision of subsidy to low income consumers of electricity in the Residential and some Commercial categories by 2014.
The indication emerged when the General Manager, Government and Consumer Affairs of the Nigerian Electricity Regulatory Commission (NERC), Dr.Tony Akah, at the weekend in Anambra State explained that if possible, such subsidy funds from the government will be channeled to other priority areas such as provision of electricity to Nigeria’s rural communities.
According to Akah, NERC is presently studying everything, he noted that if there was need to make recommendations to the government for more subsidy it would be presented on its merits.
According to him, government is expected to run out of its outlay for subsidising consumers by next year and as such, may not provide more funds if there was no need to continue with it, adding that the possibility of the government making further provision for electricity subsidy is dependent on the commission’s thoughts and recommendations.
“In the new tariff that we have, the MYTO-2, there is a component of subsidy because what Nigerians are paying now is not the full cost and because we don’t want the consumers to have a big shock, the regulator made recommendations to the government and they accepted and provided some funding.
“That funding should be exhausted by next year and unless the government decides to extend or raise funding because the overriding idea is that as more energy is ramped up, Nigerians will spend less on alternative power and then there will no longer be the need for Nigerians to be subsidised with regards to electricity usage and then that scarce financial resources can be redeployed by the government to other critical areas of needs.”
The government had in 2012 budgeted to spend about N110 billion in subsidising electricity consumption especially of Nigeria’s rural population in the next two years, starting from 2012. N60 billion was provided for this purpose in 2012 while another N50 billion was provided in the 2013 budget.
