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States Work On Total Electricity Subsidy Removal, New Tariff

State governments are getting set to eliminate electricity subsidies in their territories as more states gear up to join others in running their different power markets under their own laws.

In a document put together by the Nigeria Governors’ Forum, titled, ‘Development of the National Integrated Electricity Policy and Strategic Implementation Plan Policy Recommendations by State Governments to the Federal Ministry of Power,’ the states also stated that they would implement different electricity tariffs in their domains.

They made this recommendations based on the enactment of the Electricity Act 2023. The Electricity Act 2023 is a federal law which repeals the Electric Power Sector Reform Act and is the extant legal framework for the Nigeria Electricity Supply Industry.

The EA 2023 establishes a multi-tier electricity market framework comprising of a (i) single, wholesale federal electricity market, and (ii) retail sub-national electricity markets. However, both markets are interlinked and interconnected by policies and regulations.

The EA 2023 mandates a transition of regulatory powers from the Nigerian Electricity Regulatory Commission, an agency of the Federal Government, to States Electricity Regulatory Commissions upon states fulfilling the requirements for the transition as stated in the EA 2023.

In the NGF document obtained by our correspondent in Abuja on Sunday, the governors also charged the Federal Government to continue settling the N4tn legacy debts in the power sector, stressing that the market liabilities were created by the Federal Government under a single electricity market in NESI.

The Federal Government, through the Federal Ministry of Power, confirmed the receipt of the document on Sunday, as the state governments noted that state governments were now at liberty to make electricity laws.

Commenting on winding down electricity subsidies, the NGF said, “Electricity is a commodity and a product that must be paid for by consumers. The states believe that electricity subsidies and other forms of financial interventions in the power sector by the Federal Government over the last 15 years have been inefficient and ineffective so far.

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