The Federal Government has stood firm on its decision to implement a 240 percent tariff hike for power consumers in the band ‘A’ category, despite growing opposition calling for its reversal.
This hike, announced on Wednesday, is part of a transition plan aimed at achieving full cost-reflective tariffs within three years. However, the Nigeria Labour Congress (NLC) has strongly condemned the move, labeling it as both cruel and unpopular.
They warned that the government must be prepared to face the consequences of this decision, accusing it of prioritizing the advice of international financial institutions over the welfare of its citizens.
The hike, which took effect on April 3, has faced significant backlash from various sectors, including manufacturers and organized labor. Critics argue that it will have detrimental effects on businesses, exacerbate inflation, and stifle economic growth, particularly for small and medium enterprises.
Additionally, concerns have been raised about the lack of justification for such a steep increase, especially considering the challenges faced by consumers in accessing reliable electricity supply.
Despite mounting pressure, the Minister of Power, Adebayo Adelabu, reiterated the government’s commitment to the new tariff regime, citing the unsustainable cost of power subsidies. He emphasized that the government could no longer afford to bear the burden of subsidizing electricity tariffs, which amounted to nearly N3 trillion in 2024 alone.
Adelabu defended the decision to withdraw subsidies for band-A customers, arguing that it would free up much-needed funds for investment in other critical sectors such as health and education.
While acknowledging the short-term challenges posed by the tariff hike, Adelabu stressed that it was essential for the government to adopt a gradual approach towards achieving full cost recovery in the power sector.
He said, “This tariff review conforms with our policy thrust of maintaining a subsidised pricing regime in the short run or the short term with a transition plan to achieve a full cost-reflective tariff for over a period of, let us say three years.
“I have mentioned it in a couple of media briefings that it is because of the government’s sensitivity to the pains of our people that we will not make us migrate fully into a cost- reflective tariff or remove subsidy 100 per cent in the power sector like it was done in oil and gas sector.
“This is more like a pilot for us at the Ministry of Power and our agencies. It is like a proof of concept that those that have the infrastructure sufficient enough to deliver stable power and enjoy 20 hours of light to be the ones to get tariff hike.”
He assured that the government would prioritize the welfare of vulnerable consumers and ensure that the transition to cost-reflective tariffs is carefully managed over the next three years.
However, concerns persist about the immediate impact of the tariff hike on consumers and the broader economy, highlighting the need for transparent and inclusive policymaking in addressing Nigeria’s energy challenges.
