By Emeka Amaefula
FEDERAL GOVERNMENT REMOVES SUBSIDY ON ELECTRICITY
In what looked like a very smooth operation, the Federal Government of Nigeria has removed subsidies on electricity, the Minister of Finance, Budgets and National Planning Mrs. Zainab Ahmed stated. She revealed this during the Virtual meeting of the International Monetary Fund-IMF which had the theme “The Political economy of Fiscal Reforms in Africa.” The Minister is quoted to have said that the ongoing high price on crude oil has necessitated the increment of petrol subsidy on the Federal Government. Before now the Government of Muhammadu Buhari had set July 2022 as target when to remove subsidy on Petrol but due to adverse impact of COVID 19 on the economy it rescinded while pledging to work with the national Assembly to have it removed in phases.
According to Mrs. Zainab “We are cleaning up our subsidies. We had a setback, we were to remove fuel subsidy by July this year but there was a lot of push back from the polity. We have elections coming and also because of the hardship that companies and citizens went through during the CVID 19 pandemic, we just felt that the time was not right, so we pulled back on that.
“But we have been able to quietly implement subsidy removal in the electricity sector and as it is, we speak, we don’t have subsidies in the electricity sector. We did that overtime by carefully adjusting the prices at some levels while holding the lower levels down.
“Fuel subsidy is a huge problem for us. It has thrown our deficits too much higher than we planned. What is happening now with the global oil prices is also going to worsen matters but the current review that we are doing is to hold the subsidy at the level in which we planned.
“We are currently doing a budget amendment to accommodate incremental subsidy(removal) as a result of the reversal of the decision and we want to cap it at that. Hopefully, the parliament will agree with us and we are able to continue with our plan for subsidy(removal) otherwise the way things are going we will not be able to predict where we will be.”
Electricity consumption now attracts a Value added tax of 7.5% at tariff rate of 38.81 depending on the category of energy consumption. Electricity matters are now confined with concurrent legislation list thereby allowing states and others to generate and distribute electricity connected to the national grid.