Ewah Eleri, the Executive Director of International Centre for Energy, Environment and Development, ICEED, says the current electricity subsidy regime benefits wealthier households than low-income communities.
Mr Eleri said this during in an interview with News Agency of Nigeria on Thursday in Abuja.
He said Federal Government spent more than 10 billion dollars on electricity subsidies over the past year yet the benefits had largely gone to high-income households.
Mr Eleri explained that 10 per cent of households received more than half of the government’s electricity subsidy, estimated at about ₦3trillion, while 40 per cent benefited marginally.
“Subsidies are intended to support vulnerable communities and make electricity affordable, but the current framework largely benefits those who consume the most electricity,” he said.
The expert said that existing subsidy structure discouraged investment in renewable energies conventional electricity sources, gas-fired generation, artificially cheaper than cleaner alternatives such as solar power.
“As a result, renewable energy becomes less competitive, limiting the diversification of Nigeria’s energy mix, making it more difficult to meet climate change commitments,” he said.
He urged that similar reforms in the electricity sector could deliver comparable environmental and economic benefits while improving fairness in electricity pricing.
“We need to remove harmful subsidies that ultimately hurt the poor, constrain electricity expansion and discourage investment in renewable energy.
“Whichever way you look at it the current system leaves everyone worse off,” he said.
On the role of regulators, Eleri highlighted the opportunities created by the Electricity Act, which empowered state governments to regulate electricity supply within their jurisdictions.
He said that about 15 states had established functional electricity regulatory commissions to oversee electricity markets, expand access, resolve consumer complaints and managed disputes within the sector.
The expert said the success of the new framework would depend on clear regulatory boundaries between the Nigerian Electricity Regulatory Commission, NERC, and state electricity regulatory commissions.
He said there must be a clear understanding of the respective responsibilities of the national and state regulators to ensure an efficient and effective electricity market.
The expert expressed optimism that with well-coordinated reforms Nigeria can improve access to electricity, promote cleaner energy, reduce inequality and strengthen the performance of the power sector.
NAN
