It’s a Lie…New Electricity Tariff Won’t Increase Production Cost-Power Minister, Adebayo Adelabu Lashes Critics

The New Diplomat
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By Ken Afor

In response to mounting criticism, Nigeria’s Minister of Power, Mr. Adebayo Adelabu vehemently refuted claims suggesting that the newly proposed electricity tariff would amplify production costs for businesses.

Addressing concerns at the 8th Africa Energy Marketplace forum on Thursday in Abuja, Adelabu emphasized that the tariff adjustments were meticulously crafted to stimulate economic growth and bolster the nation’s energy sector.

Adelabu asserted that the revised tariff structure was designed to ensure fair and sustainable electricity pricing, tailored to meet the diverse needs of consumers and businesses alike.

Adelabu argued that consumers in Band A, which comprises residential customers with low energy consumption, will actually see a reduction of 30 to 40 percent in their overall energy costs when accounting for expenditures on generators and fuel.

“Those in Band A, if they do their arithmetic properly, comparing what they have been spending on energy provision from grid supply and energy generators combined before the tariff review, will see they have achieved nothing less than a 30 to 40 percent reduction in their total cost. That is the truth,” the minister stated.

He acknowledged that while electricity bills might have doubled or increased further for Band A customers, the savings from reduced generator usage and fuel costs would offset the tariff hike.

Addressing concerns about the potential impact on the manufacturing sector, the minister claimed that manufacturers in Band A should experience lower energy costs, thereby reducing their cost of production.

“Manufacturers in Band A should have lower energy costs by now, thereby reducing their cost of production, except for those who have not been paying for electricity in the past,” he said.

Adelabu, who identified himself as a participant in the manufacturing industry, dismissed arguments that the new tariff regime would increase production costs and lead to higher prices for goods and services, describing such claims as “not logical.”

The minister extended an invitation to engage in discussions and compare practical examples to substantiate the government’s position on the tariff adjustment.

“We can also come together to compare notes with practical examples. But the claim that this new tariff regime will increase the cost of production is not valid because I am in that industry too,” he added.

At the event, Dr. Kevin K. Kariuki, Vice President of the Power, Energy, Climate Change, and Green Growth Complex at the African Development Bank (AFDB), revealed plans to provide $1 billion in support to Nigeria’s power sector. He stated that the funding would be allocated through a policy-based operation (PBO) focusing on energy, designed to aid the ongoing power sector reforms initiated by the new Electricity Act.

Dr. Kariuki further mentioned that the bank would fund the implementation of policy recommendations to achieve the anticipated results of the National Integrated Electricity Policy and Strategic Implementation Plan.

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