Not surprisingly of new electricity pricing, but with some sadness, yesterday’s power press briefing has been all about the “freezer” comment. It’s helpful to know that a lot more was said since it provides context and a foundation for discussion and argument.

I took notes during HM Bayo Adelabu’s speech, and the remarks that follow are attributed to him (as well as the NERC vice-chair, who also spoke).

Also read: Shade Ladipo slays in a viral video, “Burna Boy Is a Fake, Has No Integrity,” and people react.

The crucial context to all of this is that, as of right now, the threefold electricity tariff rise implemented this week only affects Band A customers. A through E comprise the total of 5 tariff bands. Band A is the group that will receive at least 20 hours of supply every day]

Nigeria’s new electricity pricing

1. The federal government of Nigeria was subsidizing 67% of the total cost of producing, transferring, and distributing power prior to the price change.

The vice-chair of the Nigerian Electricity Regulatory Commission continued, “That 67% figure rises considerably if you isolate generation.” For instance, in January 2024, DisCos received an invoice for 240 billion naira’s worth of power generation; however, they were only required to pay 24 billion of this amount, or 10%, meaning that FGN was subsidizing 90% of the cost of generating.

2. Without tariff adjustments, the estimated total cost of the electricity subsidy (on FGN) for 2024 is ~2.9 trillion naira (~240 billion per month).

3. The total projected cost of subsidies in 2024, after tariff adjustments: ~114 billion per naira, or ~1.4 trillion month)

4. The number of Band A “feeders” in the nation has decreased in tandem with the tariff increase; these feeders are those that are required to provide a minimum of 20 hours of supply every day. Only 481 of the approximately 1,000 Band A feeders that existed earlier are currently categorized as such.

5. There are roughly 12 million “customers” for energy in Nigeria. Before you jump to judgment, please attempt to grasp this. It refers to 12 million “meter-able” consumption sites, such as homes, businesses, etc., not 12 million “people.”

6. Band A represents approximately 1.8 million, or 15%, of the 12 million electrical users. The government will keep providing electricity consumption subsidies to the remaining >10 million users.

(In connection with this, I’ve seen data elsewhere indicating that 70% of the money received in 2023 came from Band A (it’s important to verify that number).

7. Just slightly more than 5 million of the 12 million subscribers are currently metered. It translates to a metering gap above 6 million.

8. The short-term subsidized pricing scheme will persist, with a “transition plan” to achieve fully “cost-reflective” pricing within the following three years.

9. The tariff increase’s restriction to Band A is intended to act as a “proof of concept,” starting with a Band that possesses the “capacity and willingness” to cover the cost of supplies for 20 to 24 hours each day.

10. The price adjustment will assist in resolving some of the industry’s liquidity problems and provide a “line of sight” for restoration of investment and increase its “bankability”.

11. There is a severe lack of infrastructure in the power industry; vandalism of gas pipelines, grid towers, and other infrastructure, as well as outdated equipment at all levels (the minister mentioned that some equipment still bore the ECN brand, despite the company having been out of business for more than 50 years).

12. DisCos must face penalties and repercussions if they provide Band A customers with fewer than 20 hours of service. “We won’t duck our responsibilities…,”

(In reference to this, the vice-chair of NERC stated that the previous Power Sector Reform Act had restricted NERC’s authority to impose sanctions and that DisCo fines were antiquated, with some as low as N10,000 per day).

However, with the new Act, which was approved by PBAT (see No. 15 below), giving NERC more authority over punishments and regulations. Vice-Chairman used the example of 2018—when NERC suspended the IBEDC Board—and 2024—when NERC successfully dissolved the Board of KEDC. The Board proceeded to court to have the suspension lifted.

13. DisCos are now encouraged to strive on moving other Bands to Band A in order to provide them with Band A threshold and charge Band A tariffs, thanks to the new tariff system for Band A.

14. Consumer management of energy use needs to take precedence. This is where the now-viral “freezer” scenario was mentioned. Indeed, it’s definitely not the best example to give, since the distracting consequences, but the main idea of using technology more sensibly still applies.

15. The Minister underlined the continuous efforts to enhance the provision of electricity:

—The Electric Power Sector Reform Act of 2005 was overturned by the new Electricity Act, which PBAT approved, completely decentralized the industry and gave subnational governments more authority over licensing and regulation.
—Investments in renewable energy, headed by REA
—New power plants, like as the 700 MW Zungeru Hydropower project that was just finished; —Investments in new lines, injection substations, and transformers
—Closing the space for metering.
—Interactions and promotion

16. “A thousand miles of travel begin with one step, taken in the correct direction. This is going in the right way. — Bayo Adelabu.