Thursday, February 16, 2012

Federal Government to give power sector N60 billion subsidy

As the new electricity tariff comes on stream April 1, this year, the federal government says that it has budgeted the sum of N60 billion to subsidise the effect on the rural urban poor this year.

Minister of Power, Professor Barth Nnaji, disclosed this yesterday in Abuja.

Only recently, the federal government announced that from April 1, this yearthe tariff on electricity will be increased by 88 per cent. It is expected that this new rate would be announced before the privatisation of the 18 power generating, distribution and transmission companies this year.

Confirming the development, the minister said:"This year the sum of N60 billion will be made available to ensure that the urban and rural poor do not feel the tariff."

The minister however, said that Nigeria was ranked second to the last in the countries that pay electricity tariffs in Africa.

"What we want is for Nigeria to be in the middle, tariff-wise. The tariff is for the middle class. The urban poor will not be affected. Even when the subsidy is finally removed, there will be some cushioning for the poor," the minister explained.

The subsidy, he said, would be classified -residential and commercial, for easy reference, just as they would attract different rates. The classifications for the residential tariffs are R1, R2 and R3, while that of commercial are C1, C2 and C3.

To ensure that all users of power benefit from the tariff subsidy, Nnaji, said that government planned phasing out the practice of estimated billing by electricity users. This would ensure that they have meters.

The minister said that presently, power generation stood at 4,400 megawatts, adding that an additional 1,000 megawatts would be added by the end of the year when four power plants would be commissioned.

He said that the improvement in the megawatts being generated became possible due to the refocusing of dormant capacities which ensured that power supply was no longer epileptic.


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