Adebayo Adelabu, the Minister of Power, has outlined that the recent hike in electricity tariffs is a step-by-step approach towards phasing out subsidies in the power sector.

The government aims to encourage greater investment, establish tariffs that reflect the true costs for consumers, bolster the financial health of the sector, and ultimately enhance the reliability of electricity provision.

The minister argued that the government had to increase electricity prices because the existing subsidies were becoming too expensive to maintain. He noted that the subsidies were taking up an increasing share of the national budget, and that this money could be better spent on other public services.

At the same time, he acknowledged that the price increase would have an impact on consumers, but he stressed that it was a necessary step to ensure the long-term viability of the power sector.

He also mentioned that many people waste electricity even when it’s not serving any useful purpose. For example, they may leave appliances on when they’re not using them, or they may overuse appliances that aren’t necessary.

How could the minister of power solve these problems, reduce the budget without hiking electricity tariffs?

One possible solution would be to implement a system of incentives and penalties to encourage more responsible use of electricity by consumers. For example, the government could offer rebates or discounts for those who reduce their consumption during peak hours, or penalties for those who use excessive amounts of electricity.

This could be coupled with public education campaigns to raise awareness of the importance of responsible electricity use.

Moreover, the government could invest in technologies and infrastructure that allow for more efficient use of electricity, such as smart meters and more efficient appliances. This would help to reduce overall consumption without the need for price increases.

When President Bola Ahmed Tinubu took office in May 2023, he announced that the fuel subsidy would be removed. This decision had an immediate impact on oil companies in Nigeria, which began increasing the price of petroleum. This move sparked controversy and concern among Nigerians, who were worried about its effect on the economy.

President Tinubu addressed the nation in a series of press conferences, explaining that while the fuel subsidy had been intended to help the oil and petroleum industries, it had been exploited by corrupt officials.

He argued that removing the subsidy would allow the government to direct funds to other sectors, such as infrastructure, healthcare, and education.

President Tinubu’s decision to remove the fuel subsidy was highly controversial, and he faced significant criticism from both citizens and opposition parties.

Many people expressed their frustration and concern over the potential impact of this decision on the cost of living and the wider economy. Some argued that the move would disproportionately affect the poor and vulnerable.

Despite the criticism, President Tinubu stood by his decision and argued that the funds previously spent on the fuel subsidy could be better used to invest in infrastructure, healthcare, and education.

He said that while the short-term impact of removing the subsidy might be difficult for some people, in the long run it would lead to economic growth and benefit the country as a whole.

The decision to remove the fuel subsidy has had serious economic consequences for Nigeria, leading to increased costs for many basic goods and services. Food prices have risen by over 100%, cement has become more expensive, and the cost of cooking gas has increased.

This has led to a number of negative effects, including a rise in tuition fees at Nigerian institutions, the departure of businesses from the country, and a decrease in the value of the naira. Many citizens have become increasingly frustrated by the economic difficulties they are facing as a result of these changes.

The situation has also led to an increase in unemployment, as businesses struggle to stay afloat and individuals face rising costs. Inflation has become a significant problem, and the Nigerian economy is facing a serious crisis.

In addition, the removal of the fuel subsidy has led to a shortage of gasoline, making it difficult for people to travel and conduct their daily activities.

The removal of the fuel subsidy has also had an impact on security in Nigeria. With the increased cost of living and decreased access to basic goods and services, many people have turned to crime in order to survive.

Banditry, theft, and other forms of crime have increased, and the country is facing a serious security crisis as a result.

The increase in kidnapping and other violent crimes is a particularly concerning consequence of the economic instability caused by the removal of the fuel subsidy. Kidnapping has become a major problem in Nigeria, with criminal gangs targeting individuals, businesses, and even schools.

This has not only led to financial losses and trauma for victims and their families, but has also had a devastating effect on the country’s education system.

The question now is: even if the fuel subsidy is returned, can it return Nigeria to its previous level?

• Can the price of foods and commodities go down?
• Can Tution Fees Goes Back To It’s Normal Level?
• Will the dollar-to-naira exchange rate go back to its previous rate?
• Can the foreign and local companies that have stopped operations because of bankruptcy be active again?

The Answer Is Even If It Will Happen, It Will Takes Years

It’s true that the economic damage caused by the removal of the fuel subsidy will likely take years to fully repair, even if the subsidy is reinstated. This is because it takes time for prices to adjust, businesses to recover, and the foreign exchange market to stabilize.

The saying “It may take just a day to destroy a house, but it can take many years to build it back” is a good reminder that economic recovery is a long-term process.