Nigeria succumbs to World Bank conditions, removes subsidy on electricity

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The Federal Government of Nigeria may have succumbed to the pressure by World Bank to remove its subsidy on electricity as a condition to accessing more funds.

Recall that last week President Muhammadu Buhari wrote to the National Assembly seeking approval to borrow the sum of $4,054,476,863 billion and €710 million, a move which generated uproar.

The World Bank has vowed not to allow the government to access more funds until the government’s subsidy on electricity was removed.

The World Bank expects Nigeria to meet certain preconditions before the loan is disbursed, which include unification of the exchange rate, the introduction of new electricity tariffs and removal of fuel and electricity subsidies.

Although this may inflict untold hardship on ordinary Nigerians, stakeholders have recommended that the subsidy money should be put into productive ventures and infrastructure.

An economy expert, Mr Eze Onyekpere, does not see the reason the government should subsidise the inefficiency of the GenCos and DisCos with public funds. He suggested that the funds should be channelled into productive consumption.

‘What I am saying is that just as we supported the increase in VAT what we need to do is to free up resources for other infrastructure and development. And subsidy on electricity is one of the things that is taking the money which we don’t even have.

‘What I am advocating is conditional in terms of ensuring that these DisCos and GenCos and transmission companies are run with the best corporate performance standard and run very efficiently. I am not actually advocating that Nigerians should subsidise the inefficiency of these companies.

‘My suggestion is for the citizens of this country to resist the companies whether through civil disobedience or litigation or media advocacy to ensure that they are run efficiently so that we don’t subsidise their inefficiency. I don’t like the idea of using the public money to subsidise private consumption and that is not a productive consumption for now. Even if you want to do subsidy it has to be for production and that production has to be targeted.

‘If we do our advocacy right, we will begin to hold the government accountable and there will be other countervailing measures to reduce the impact.

‘The cost of electricity is one of the highest costs in terms of contributions to the cost of production and Nigeria is a high-cost production economy.

‘Yes, people will suffer but the suffering can make us wake up and demand our right.’

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However, the Executive Secretary of GenCos, Dr Joy Ogaji, told Daily Sun that the government had not officially written the generation companies and cannot offer an explanation on such issues.

‘They have not officially informed us. In the first instance, I didn’t know that they are paying subsidy on electricity because we are selling based on the approved regulatory price. So, if the government says that they are removing it I don’t know the details of the subsidy,’ she said.

Meanwhile, the former Minister of Power, Sale Mamman, said that the federal government subsidise electricity monthly to the tune of N50 billion.

The funds, he said, are provided to augment the shortfall by the Distribution Companies who have failed to defray the cost of bulk electricity supplied to them by the Generating Companies.

Mamman explained that as part of measures to assist ordinary Nigerians over their frustration in receiving adequate electricity supply, the Federal Government was forced to categorise electricity supply into various bands between highbrow areas and low-income earners to enable everyone to cope with the cost of electricity.

‘Nigerians must understand that these companies were privatised long before the advent of this administration but the government has no alternative than to continue managing the sector before a final solution is secured,’ he said.

‘Through the Presidential Power Initiative and other intervention measures, the Government is diligently working to massively resolve all these inherited problems that have continuously frustrated the success of the sector”.

The minister noted that most of the DisCos were sold off and managed as family businesses which had made it difficult to be professionally managed, but that despite this apparent difficulty the Government cannot roll back the privatisation process.

Mamman regretted that while some of these problems persist, remarkable performance and progress has been achieved by the Federal Government, as the supply of electricity has stabilised at over 5,000 Megawatts, up from less than 4,000 Megawatts before President Muhammadu Buhari came to power. He emphasised that Nigerians now enjoy a stable power supply from fifteen to twenty-four hours daily. The minister blamed the shortfall or interruptions on supply to some quarters on faulty equipment and supply lines and called on consumers to report such developments to their distribution offices.

He also pointed out that it was the responsibility of the DisCos to replace faulty transformers, electricity poles and cables whenever they occur and warned the Distribution Companies to stop tasking ordinary Nigerians with these responsibilities before they could restore power interruptions.

While commending Nigerians on their efforts to pay for electricity despite the present economic and social problems facing them, he advised them to minimise their usage of electricity by switching off their appliances when they were not at home or when they were not immediately needed in order to reduce pressure on equipment supplying them power.

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