N30 billion in monthly electricity subsidies will stop next year – Osinbajo
The Federal Government will stop paying most of its electricity subsidy payments next year, which are expected to be around N30 billion per month.
Vice President Yemi Osinbajo said the government anticipated the electricity sector to earn money from the power sector market at the 14th Nigerian Association for Energy Economics/IAEE conference in Abuja yesterday.
The conference’s theme is “Strategic responses of the energy sector to the consequences of COVID-19 on African economies.”
Prof. Osinbajo, who was represented by Engr. Ahmad Zakari, Special Assistant to the President on Facilities, stated that the government would invest over $3 billion in transmission and distribution infrastructure in the coming years.
He explained that President Muhammadu Buhari’s administration’s efforts to restructure the energy sector would ensure that it continues to play an important role in the country’s social and economic development.
“Electricity tariff reforms with service-based tariffs increased electricity sector collections by 63%, enhancing revenue assurance for gas producers and stabilizing the value chain,” he stated.
“From next year, it is expected that all power market earnings will be received from the market with low subsidies, as metering reforms and DISCO efficiency continue to improve.
“Through the involvement of the Central Bank of Nigeria, Siemens collaboration, World Bank and Africa Development Bank, and others, over $3 billion will be invested in transmission and distribution, putting us on the path to achieving 10 gigawatts.”
He stated that as the electricity industry stabilized, more power was required to serve the country’s enormous population.
“That is why, in order to meet our current and future needs, this administration continues to invest in generation,” he stated.
Osinbajo challenged the attendees to come up with answers to the country’s significant energy concerns, including the COVID-19 pandemic and the energy transformation.
Earlier in his remarks, Chief Timipre Sylva, Minister of State for Petroleum Resources, noted that the COVID-19, which caught the globe off guard in 2020, had a significant influence on the oil sector.
Prof. Yinka Omorogbe, President of NAEE, warned that the energy revolution and push toward net zero carbon were genuine, and that Nigeria needed to take steps to catch up with the global trend.
“For some, change entails a shift away from the comforting familiar and toward scary vistas marked by uncertainty.
“However, a careful examination of this season will reveal that it is a time when change cannot be halted or hijacked, and that those who can adapt will be the ones who survive. For the time being, it is here to stay.
“For African countries that face a lack of access to modern energy services and have no choice but to expand their energy businesses, this poses a fascinating and, to me, thrilling challenge.
“Coal, bitumen, crude oil, natural gas, solar energy, wind, tidal and wave energy, geothermal energy, and other energy resources abound in Africa. The continent is fortunate. Unfortunately, these resources have not yet been fully utilized to their full potential for the benefit of the people.
“Unfortunately, Nigeria has not only come to epitomize the paradox of poverty in the face of plenty in the energy sector, but it also has the strange revenue-draining paradox of being both a major exporter of crude oil and a major importer of subsidized petroleum products at a cost that the country cannot afford,” Mrs Omorogbe said.
In his remarks, Engr. Bello Gusau, Executive Secretary of the Petroleum Technology Development Fund, PTDF, highlighted that the COVID-19 pandemic had had a significant impact on African economies, particularly those that rely on crude oil exports.
“In Nigeria, where the oil sector provides for half of government revenue and 90% of foreign exchange profits, GDP growth for oil has not been recovering as predicted, a trend that could have severe consequences for rapid economic recovery in the post-COVID-19 era,” he added.