By George George Idowu
The Minister of Power, Adebayo Adelabu, has announced that the federal government can no longer sustain subsidies for the power sector due to mounting challenges.
Speaking in Abuja to newsmen on Wednesday, the minister highlighted the nation’s burgeoning debt to generating and gas companies, totalling 1.3 trillion naira and 1.3 billion dollars, respectively.
Adelabu emphasized the necessity of transitioning towards a cost-effective tariff model, as only a fraction of the required subsidy funds had been allocated in the current budget.
He said that to mitigate the crisis, state governments will now be permitted to independently generate power for their regions.
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The declaration follows recommendations from the International Monetary Fund (IMF) urging the government to eliminate both fuel and electricity subsidies to restore macroeconomic stability.
Despite the hardships faced by Nigerians since the removal of fuel subsidies in May 2023, the IMF asserted that subsidy removal is imperative for economic sustainability.
Acknowledging Nigeria’s challenging economic landscape, the IMF commended the government’s recent policy reforms, including the removal of fuel subsidies and exchange rate unification.
The IMF stressed the need for continued efforts to stabilize prices and foster sustainable economic growth, emphasizing monetary tightening as a critical step forward.
However, as articulated by the Central Bank of Nigeria’s proactive monetary policies, the government remains committed to restoring macroeconomic stability and promoting inclusive growth.
