Electricity Subsidy Gulps N30bn Per Month – FG

It disclosed that the government’s subsidy on electricity had been reduced by N20bn monthly following improvements in the collection of power tariffs by distribution companies.

The government stated this in a document on the progress and overview of Nigeria’s power sector. The document was obtained by our correspondent from the Federal Ministry of Power in Abuja.

In February this year, the Minister of Power, Sale Mamman, stated that the Federal Government was subsidising electricity supply across the country to the tune of over N50bn monthly.

Mamman had explained that the subsidy spending was because the government was worried by the incessant complaints by ordinary Nigerians over the unavoidable and periodic increase in the cost of electricity.

He said the funds were provided to augment the shortfall by the power distribution companies who had failed to defray the cost of bulk electricity supplied to them by the generating companies.

He had further explained that following a minor increase in the tariff regime, the subsidy decreased but still constituted a serious drain on the nation’s economy.

However, in the document on the progress of the sector sighted in Abuja on Tuesday, the government revealed that its subsidy on electricity had dropped by N20bn monthly.

Providing an explanation on current electricity market collections in the document, the government said, “Tariffs rose by 36 per cent from September 2020. Collections have grown by 60 per cent plus.

“Government subsidy has been reduced by N20bn per month. Record collections of N65bn hit in December 2020 cycle (from the average of N39bn).

Aside from subsidising electricity, the Nigerian government also subsidises Premium Motor Spirit, popularly called petrol, despite calls against this by both local and international organisations and experts.

Earlier this month, for instance, the International Monetary Fund expressed concern over the resurfacing of subsidies in Nigeria.

The global institution described the development as concerning, particularly in the context of low revenue mobilisation.