FG may stop electricity subsidy in 2014

The Federal Government may discontinue the provision of subsidy on electricity for low income consumers from next year, the Nigerian Electricity Regulatory Commission has said.

This, according to the commission, will affect low income electricity consumers in the Residential 1 and 2 and Commercial-1 cadres.

The General Manager, Government and Consumer Affairs, NERC, Dr. Tony Akah, stated this at the Power Consumers Assembly in Nnewi and Onitsha, Anambra State.

Akah, according to a statement obtained by our correspondent on Sunday, said if possible, the subsidy fund would be channelled into other priority areas such as the provision of electricity to the rural communities in line with the Federal Government's rural electrification programme.

He was quoted as saying, 'In the new tariff that we have in the MYTO-2 (Multi Year Tariff Order 2), there is a component of subsidy because what Nigerians are paying now is not the full cost.

'Because we don't want the consumers to have a big shock, the regulator made recommendations to the government and it accepted them and provided some funding.

'That funding should be exhausted by next year unless the government decides to extend or raise it. Because the overriding idea is that as more energy is ramped up, Nigerians will spend less on alternative power; and then, there will no longer be the need for Nigerians to be subsidised with regards to electricity usage.

'Then, that scarce financial resource can be redeployed by the government to other critical areas of need. There is subsidy provided for certain amount and for certain period, and after that, it will go.'

Akah said the government might run out of its outlay for subsidising consumers by next year and as such, it might not provide more funds if there was no need to continue with it.

In 2012, the Federal Government budgeted about N110bn to subsidise electricity consumption.

The fund was for low income earners in rural communities and was meant to subsidise their power consumption for two years.

A breakdown of the expected subsidy distribution as shown by the former Minister of Power, Prof. Barth Nnaji, indicated that the Federal Government had earmarked N60bn for electricity subsidy in the 2012 budget and another N50bn in the 2013 budget.

Akah, however, stated that the possibility of the government making further provisions for electricity subsidy was dependent on NERC's thoughts and recommendations.

'But the regulator right now is studying everything, and if there is a need for us to make recommendations to the government for more subsidy, and in view of the fact that we may have to review the tariff, then that will be presented on its merit to the government,' he said.