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Yemi Oke: Nigeria Should Target Electricity Subsidies Towards Consumers, Not Production

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Professor of Energy and Electricity law, Yemi Oke has advised the federal government to target direct subsidies towards the consumers and not on production.

In an interview with ARISE NEWS on Wednesday, Oke said by shifting the focus away from production subsidies, wastage and excessive production costs could be mitigated, ultimately fostering efficiency and sustainability in the power sector.

“Coming now specifically to the power sector, Nigerians were not even aware till recently when some of us started amplifying that there is huge subsidy in the power sector. But if the government can’t continue to subsidize darkness, if you’re giving subsidies for the purpose of electricity, then it’s supposed to be for the fact that Nigerians are having power.

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“But that is not the case with the power sector. The government needs to restructure the regime in the power sector. It is going to kill the Nigerian economy. Government shouldn’t continue to subsidize production despite the challenges. If there is going to be a direct subsidy, it should be to consumers. you can’t subsidize production because it is going to incentivize wastages and humongous production cost.”

Criticizing the practice of subsidizing electricity without ensuring tangible benefits for consumers, the energy expert called for a restructuring of subsidy mechanisms to align with economic realities.

“Power sector is one area we have to look at ourselves and tell the bitter truth. I have always advocated and still stand by my position that the power sector is one sector we need to get right for things to start to crystalize in the direction of progress and economic prosperity. We have made a number of mistakes in the power sector and we need to start correcting the mistakes.

“The current structure of the power sector is not sustainable and as an energy expert, I feel we have too many subsidies in the energy sector, which include petroleum, gas and power sector. Once we have humongous subsidies in the energy sector generally, would that be sustainable? The answer is No.

Furthermore, Oke criticized the Power Sector Reform Act of 2005, labeling it as flawed and ineffective. He said despite provisions for the PCAF, aimed at supporting low-income earners, the fund has never been operationalized, leaving a critical gap in providing relief to vulnerable consumers.

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“We have always had a mechanism in the law which was never crystalized. I objected to that. The power sector reform act of 2005 was a funny law that I have always been criticizing since it was put in place. A lot of Nigerians are not aware that we have a power consumer assistance fund (PCAF), even in the old law.

“PCAF was never operationalized. It was a structured pool of funds meant to subsidize low-income earners who would not be able to afford hikes in electricity tariffs. Government should put in place appropriate structures that would crystallize PCAF. That would reduce the burden on Nigerian”

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