Federal Government Quietly Increased Electricity Tarrif: Stops Electricity Subsidy, To also Stop Fuel Subsidy

Minister of Finance, Budget and National Planning, Zainab Ahmed




The Minister of Finance, Mrs Zainab Ahmed, has revealed how the Federal Government quietly removed the subsidy on electricity tariff. She said the government had to carefully adjust the prices incrementally at some levels.

Speaking on Thursday at a virtual meeting of African Finance Ministers and the International Monetary Fund, Ahmed also said the amendment of the budget was ongoing to accommodate the incremental removal of fuel subsidy. The theme of the meeting was ‘The political economy of fiscal reforms’.

Ahmed said, “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 pushback from the polity. We have elections coming and because of the hardship that companies and citizens went through during the COVID-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 we speak, we don’t have subsidies in the electricity sector. We did that incrementally over time by carefully adjusting the prices at some levels while holding the lower levels down.


She said fuel subsidy remained a huge problem for the government as it had thrown up deficits more than what was planned. She noted that the rise in global oil prices would worsen the issue “but the current review that we are doing is to hold the subsidy at the level in which it is planned,” she said.

Ahmed added, “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 the deficit will be as a result of the fluctuation in the global market.”

She stated further that the government was improving tax administration and compliance by adopting technology so as to increase revenue.