Electricity Subsidy of 4 Trillion Naira: Electrifying Sanity for 220 Million Nigerians

 

A close relative who recently relocated to the United Kingdom and resides in a region that is one-and-half-hours by road towards the East of the administrative & commercial capital, London, had conducted a self-audit of her power usage for me over the phone yesterday 31st July 2025. For her two-bedroom apartment that has its kitchen-within-the living room setting, the last 30 days electricity bill (in summer – not a winter period where home heaters usually shoot up power consumption) amounted to £103 (one hundred and three British pounds). She could monitor it clearly on her home-installed meter. The three occupants of the modest house are 1 adult, 1 teenager adolescent and 1 pre-adolescent, who survive on 1 television, 1 plugged-in Wi-Fi device, 1 unit of a 4-phased electric cooker, 1 kitchen heat extractor, 4 mobile phones, 3 laptop computers, 14 light bulbs and 12 electric sockets. Assuredly, she reminded me that all these appliances do not connect to power at the same time and as such, her July 2025 energy charge is a conservative measurement due to her family’s prudent energy consumption. I may not indulge the emotional backlash of mathematically converting £103 to naira at a current rate of N2,053 to £1 but will emphasize the institutionalized culture of transparency in the power sector of that country.

Though the above narration in the land of our colonial masters lends credence to the fact that power is not a cheap service, it remains an essential criterion for any nation’s economic leap and all-sectoral self-sufficiency achievable through the expected contribution of citizens and residents to Gross Domestic Product (GDP). Whereas stable electricity remains a mirage to Nigerians, the cost element of its generation-transmission-distribution sequence in a deregulated system can be equitably and sustainably shared among government, private investors and the consumers if each of these players consistently keep to their sides of the bargain. Unfortunately, since the privatisation of the power sector by former President Olusegun Obasanjo’s administration (1999-2007), this pivotal industry has suffered a myriad of abuse and neglect of responsibilities on the part of one or all of the three interested parties. The investors-dominated generation arm of the value chain has been unbale to meet the financial requests of organizations that supply gas to power the infrastructure of the Generation Companies (GENCOs); government failed to finance the transmission lines; many Distribution Companies (DISCOs) lacked sufficient capital in short-term to inject financial life into the procurement of meters for many consumers for a medium- and long-term recovery of investments; and many consumers shortchange these investments by underpaying for the value of power produced either due to sharp practices (like bypass of meters) or the undervalued rate per kilowatt of electricity consumed.

One heightened consequence of the complex interplay of these dynamics is the ongoing liquidity crisis, which if left unaddressed, may cripple the electricity market for government, investors and Nigerian consumers. This was the submission of the GENCO Executives during one of their Save Our soul (SOS) meetings with the Honourable Minister for Power, Chief Adebayo Adelabu. Already, most Nigerians are grappling with economic hardship that was induced by the dare-to-do mien of our President, Asiwaju Bola Ahmed Tinubu, GCFR which he demonstrated through some critical policy reforms in the energy sector. That historic and tremor-inducing declaration “Oil subsidy is gone” on 29th May 2023 as he took the oath of office, which was followed by his fearless unification of the foreign exchange (Forex) system, immediately spiked the prices of commodities. The predicament of economic, political and intellectual analysts was distinguishing between goods & services whose means of production truly incurred higher fuel costs to justify marginal or sharp increases in retail prices and those without clear rationalizations for fee rise except the frenzy of the moment or “bad belle” effects.

While Asiwaju and his media team continue in their attempt to pacify Nigerians that Mr. President is the first in the current fourth republic and recent 26-year democratic history to deploy a root-cause-and-not-symptomatic-redress approach to many critical economic challenges society at the expense of his political goodwill, his wisdom not to adopt a similar strategy in addressing the power sector reforms at this time  is the focus of this article. The primary roles of the Nigerian government are to ensure safety & security and ensure the welfare of citizens. I have written in times past about the undeniable place of subsidies shouldered by governments in maintaining economic stability for their citizenry everywhere in the world. Understanding the appropriateness of seasons for the introduction of new and/or reformed policies, whether for political or non-political expediency, is also a necessary strategy for a democratic leadership to effectively administer a nation. Whether it is the necessity of preventing the combined foes in the ADC, PDP & LP from calling for its head in the race towards the 2027 Presidential elections or a true empathy for the economic burdens of average Nigerian household, it is commendable that President Tinubu’s government continue to uphold electricity subsidy.

Hence, it was comforting to read various news headlines last week that Tinubu Approves 4 trillion bond for GENCOs” during a meeting he held with their representatives to discuss the demands for cash bailout totalling about four trillion naira. This gross estimate was said to have arisen from backlogs of unpaid subsidy claims by previous administrations at the Federal level. Although President Tinubu’s caveat was the need to verify these claims before they are defrayed, the consideration of this life-saving demands by Mr. President was re-assuring not only for the GENCOs but the entire Nigerian population who are the beneficiaries of this humongous power subsidy.

Over and above this laudable move is however the need to promote a twin culture of fairness and transparency within the power industry. Can Mr. President, through the Federal Ministry of Power and the Nigerian Electricity Regulatory Commission revisit the categorization into Band A and others? Band A refers to a category of Nigerian electricity customers who receive a minimum of 20 hours of power supply per day at very high rates. In trying to promote a service-based tariff structure, shall we inflict financial strain on Band A users? In addition, can there be a deadline for all DISCOs to provide meters to all their customers nationwide to ensure transparent billing? Like the oil sector, our power sector appears riddled with shady and shrouded transactions that requires Asiwaju’s bold posture to help demystify.

That noted, it is without doubt that President Bola Ahmed Tinubu’s pledged payment of verified electricity subsidy of four trillion naira to GENCOs will electrify sanity for two hundred and twenty million Nigerians who are still reeling with the removal of fuel subsidy and the drastic reduction in the official and non-official rates of Nigeria’s hitherto arbitrary Forex markets.

Dr. Adetolu Ademujimi is a Medical Doctor, Health Finance Specialist, Author, Reformer, Coach, Public Policy expert and social entrepreneur who can be reached in Abuja via adetoluademujimi@gmail.com 

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