Nigeria plans ₦900bn electricity tariff subsidy

Nigeria's electricity sector is facing a period of uncertainty as the government announces plans to spend 900 billion naira to subsidise electricity by December. This decision comes after a recent halt in electricity tariff hike, sparking discussions on the impact of these subsidies and the ongoing privatisation efforts in the sector. George Etomi, Chairman of West Power and Gas, shared his insights on these developments in a recent interview on CNBC Africa. Etomi emphasized the need for proper risk allocation and market confidence in light of the subsidy announcement. He pointed out that while subsidies can be a common tool for policymakers to address political exigencies, it is crucial for regulators to ensure that these subsidies are targeted effectively to avoid distorting the market dynamics. Etomi also highlighted the importance of collaboration and respecting existing contracts in the sector to maintain stability. The Minister of Power's statements regarding potential restructuring of Discos and the involvement of state governments in the electricity value chain have added another layer of complexity to the sector. The discussion around reducing Disco coverage areas and the role of state governments in the electricity market has raised questions about the future direction of the sector. Etomi emphasized the need for clarity and collaboration in navigating these changes to prevent any disruptions that could derail the progress made in the privatisation process. Despite the challenges and uncertainties facing Nigeria's electricity sector, stakeholders are hopeful that a balanced approach to subsidies and privatisation, guided by transparency and collaboration, will ultimately lead to a more stable and reliable power system for the country.