FG Seeks $15billion Investment in Power Sector, Plans to Increase Electricity Tariffs
- The federal government of Nigeria has said that it wants to attract up to $15 billion in private investments into the power sector
- The government also unveiled plans to increase the electricity tariff for Nigerians to reflect the full cost
- Nigerian government still spends trillions of naira on energy subsidy despite removing subsidy for Band A subscribers last year
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Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.
The Federal Government of Nigeria has revealed that it will require up to $15 billion in private investments to solve teething problems in the power sector.
The government disclosed this while making an investment pitch at the World Bank Energy Summit in Tanzania.
This will help the sector achieve further inclusion into the country, and provide electricity for about 86 million Nigerians without electricity.
Source: Twitter
FG to increase electricity tariffs
The government also revealed that it will increase electricity tariffs before 2027, by implementing a plan where pricing reflects the full cost of production. This will serve as an incentive to attract investors into the sector.
However, there will be a subsidy plan to mitigate the impact of the increased costs for the most vulnerable households.
The plans also include subsidizing 50kWh for Nigerians in their monthly energy consumption, using vouchers or other means.
According to a Bloomberg report, the government said about $23 billion was required to restore the power sector, and the $15 billion private investment would cover a significant part of this gap.
Constant grid collapses amid increased electricity tariffs
Despite having significant natural resources, including vast gas reserves, strong hydroelectric potential, and abundant sunlight, Nigeria currently produces only around 13,000 megawatts of electricity for its population of over 200 million people.
This limited capacity has resulted in frequent power outages and national grid collapse accompanied by apologies from the Transmission Company of Nigeria. Many Nigerians now rely on alternative energy if they can afford them.
As part of its future energy strategy, Nigeria plans to increase the share of renewable energy in its electricity mix from 22% to 50% within the next five years. The government also said in its pitch, that there are plans to expand the number of households connected to the grid.
Recall that the government removed electricity subsidies for about 15% of urban households, being Band A customers, leading to a threefold increase in tariffs.
However, the government still allocated an estimated 2.2 trillion naira to energy subsidies, even though Electricity tariffs have increased severally since then.
Industries leave grid over increased electricity tariffs
A recent report from Legit.ng showed that several big industries, educational institutions and health facilities are leaving the national grid to generate captive power.
This includes the Nigerian Breweries, the Nigerian Defence Academy (NDA), and six other universities and their teaching hospitals.
According to these institutions, the high electricity bills from the distribution companies continue to shock them, especially since they hardly enjoy stable power given the constant blackouts caused by the frequent grid collapse.
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Source: Legit.ng
