Kelvin Bowoto
To subsidize energy usage in 2024, the federal government will need at least N2.9 trillion. This represents a significant increase over the previous prediction of N1.6 trillion.
Adebayo Adelabu, the Minister of Power, urged the federal government to either fund the subsidies or enable cost-effective tariffs to prevail.
Recall that the Nigerian Electricity Regulatory Commission (NERC) stated that tariffs will henceforth be reviewed monthly due to exchange rate volatility and inflationary pressures.
Adelabu, who spoke at a news conference in Abuja on Wednesday, said just N450 billion was allocated for energy subsidies in the 2024 Budget, but the ministry will require around N2.9 trillion at the current currency rate of the naira to the dollar.
To subsidize energy use in 2024, the federal government will require at least N2.9 trillion. This is a huge increase over the prior estimate of N1.6 trillion.
Adebayo Adelabu, Minister of Power, has urged the federal government to either fund the subsidies or allow cost-effective pricing to prevail.
Recall that the Nigerian Electricity Regulatory Commission (NERC) has announced that prices will henceforth be revised monthly due to exchange rate volatility and inflationary pressures.
Adelabu, speaking at a news conference in Abuja on Wednesday, stated that just N450 billion was budgeted for energy subsidies in the 2024 budget, but the ministry will require around N2.9 trillion at the current naira-to-dollar exchange rate.
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Highlighting the road map for sector stabilization in preparation for turnaround and transformation, Adelabu stated that the federal government must settle the existing sectoral outstanding debt obligations to the Gas Supply and Power Generation companies using a combination of cash payments and guaranteed debt instruments, including N1.3 trillion in current debts to the GenCos and $1.3 billion in legacy debts to the GenCos.
Other roadmaps include boosting investments across the value chain for infrastructural improvements, capacity growth, and transmission automation; diversifying power generation to absorb renewables and facilitate the country’s trip to the Energy Transition target; encouraging a distributed power strategy in collaboration with sub-national governments, with an emphasis on the embedded power model, to reduce pressure on the national grid and ensure alternative electricity supply to DisCos; as well as the development of a rural electrification plan from the bottom up and top down to identify unserved and underserved rural and suburban communities, among other things.
The minister stated that state governments will now be able to generate power independently to supply power to their respective states.
He stated that the grid had collapsed six times between December 2023 and now due to a lack of gas, ageing machines in the grid value chain, insufficient capacity to evacuate generated power, and the destruction of power stations in some parts of the country’s northeast geopolitical zone.
He stated that the transmission business in Nigeria has over 100 abandoned projects due to discrepancies in contract figures caused by FX volatility and that the business will not grant new contracts until all such projects are completed.
The minister also stated that over 50 billion naira has been set aside in the 2024 budget to establish small grids to provide power to remote locations.
Techrectory with Agency Report.
