Adebayo Adelabu, Minister of Power, said that introducing Band A with a higher tariff reduced electricity subsidy to N1 trillion from about N3 trillion.
The minister said this at Tuesday’s public hearing on electricity tariffs in Abuja.
The House of Representatives Joint Committee on Power, Commerce, National Planning, and Delegated Legislation organised the hearing.
Mr Adelabu said the expected subsidy would have been close to N3 trillion without an increase in electricity tariffs. He said the federal government could not afford to pay N3 trillion in subsidy.
The minister said that instead of piling up debt for the government, the ministry came up with a model for customers to pay for subsidies on Band A.
According to him, this will compensate for the fuel and diesel that consumers are using.
He said what consumers spend now is cheaper than fuel and diesel, even with the increase in the electricity tariff.
“We are still about the cheapest, even in sub-Saharan, in spite of the tariff. Our neighbouring countries pay higher. So the price isn’t comparable. Band A is cheaper compared to other sources of generating power. It is almost 50 per cent cheaper to connect to band A of the national grid than to run on fuel and diesel.
“So when we complain about the higher tariff, it is cheaper for any business to pay for a grid connection than to individually generate power,” he said.
The minister said President Bola Tinubu’s administration meant well for Nigerians, adding that he would not aggravate a bad situation in the country.
The minister said the increase in tariff was not targeted at making life difficult for Nigerians but to make life affordable for the people.
Deputy Speaker Benjamin Kalu said the Nigeria Electricity Regulatory Commission’s decision to increase electricity tariffs had sparked widespread discontent.
He said the justification for this tariff hike, as outlined by NERC, was to address the industry’s mounting debt and ensure the continued functioning of the power sector.
Mr Kalu said it was evident that the move had not been well-received by the citizenry, adding that the fears expressed by many were valid. He noted that a sharp increase in electricity tariffs would only exacerbate economic hardship.
“There are genuine concerns that higher utility bills resulting from this tariff hike can have ripple effects on operational costs for businesses, potentially leading to increased prices of goods and services,” he said.
Mr Kalu said lawmakers are committed to working closely with the executive to transform the power sector into a model of efficiency and sustainability as outlined in the legislative agenda.
“We are dedicated to providing legislative support to efforts of the Tinubu’s administration in reforming the power sector by addressing all legal and legislative impediments,” he said.
(NAN)