Economist Backs Nigerian Senate’s Rejection Of Plans To Increase Electricity Tariff

Chief Economist and Partner with SPM Professionals, Mr Paul Alaje, has countered the call by Nigeria’s Minister of Power, Adebayo Adelabu, for the Federal Government to completely remove subsidy on electricity.

Alaje warned against further removal of any form of subsidy in the country, as it could result in economic crisis.

He maintained that heeding the honourable minister’s call would worsen hardship and poverty in the country, as people were already bearing the brunt of a blanket removal of petrol subsidy without adequate measures to cushion the effects which manifested in the rising costs of things across the country.

“It is important to state that removing any form of subsidy in the near term could result in further economic crisis and dislocation,” Alaje warned in a statement via his X handle.

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“I heard the minister of power advocating an immediate removal of the electricity subsidy. What the Honorable Minister needs to understand is that this will further aggravate the hardship, poverty and deprivation in Nigeria. It may also spark social concerns.”

The economic expert advised that the electricity subsidy should be retained till when the country must have recovered from shocks caused by the removal of petrol subsidy last year.

The minister of power had last week made a call for the immediate removal of electricity subsidies, and adoptoon of a cost-reflective tariff that is more economically sustainable.

According to Adelabu, there is an outstanding debt of about N1.3 trillion being owed to electricity-generating companies, and a staggering $1.3 billion owed to companies that supply gas.

While the minister and some other stakeholders in the power sector continue to make a case for the removal of electricity subsidy, the Senate has rejected it, urging the government not to increase tariff for now to avoid anything that would worsen the prevailing economic hardship faced by the citizens.

The upper chamber also resolved to conduct a proper investigation into the reasons behind the call for the removal of electricity subsidy.