The federal government has announced a plan to introduce a pay-as-you-go model of payment for electricity consumption as part of efforts to end government-sponsored subsidy for the sector.
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, made the disclosure on Thursday at a media briefing in Abuja.
The minister also disclosed that revenue allocation to sub-nationals has been increased from N2.1trillion to over N7trillion in the first half of the year. He said the amount included monthly revenues, 1.8% of the GDP and backlog of other unpaid statutory allocations to the States.
The minister said the transition to a pay-as-you-go approach would be given effect after the government has successfully cleared the outstanding N4trn liability owed to the various investors in the sector. The N4trn energy sector liability was a resolution of the current administration to deal with past liabilities and transition the sector to a fully deregulated industry.
“Going forward, that programme has been built as well, looking at ways of making sure that collections increase, making sure that there’s more of a pay-as-you-go approach that doesn’t leave government with a bill to pay,” Mr Edun stated at the media conference.
He said the government was planning to avoid the type of power purchase agreements that have left the government with a huge burden to bear. “The idea is to replace them with somebody that invests in power and sells it. So you don’t invest in power generation in order to hang it on the government to pay you no matter what happens at the other end,” the Minister added.
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