50% Electricity Subsidy Not Enough

Last month, the federal government approved a 50 per cent electricity subsidy for all public hospitals and tertiary institutions, including universities, polytechnics, and colleges of education.

The minister of state for health, Dr. Tunji Alausa, revealed this at the National Ear Care Centre in Kaduna during the commissioning of some projects in that state.

He said that hospitals and the public education system would soon enjoy significant reductions in electricity tariffs as the Ministry of Power develops the implementation plans and strategies.

Alausa said, “President Bola Ahmed Tinubu has magnanimously approved a 50 per cent electricity subsidy for all public hospitals and the education system: universities, polytechnics, and colleges of education.”

We recall that on April 3, 2024, the federal government through the Nigerian Electricity Regulatory Commission (NERC) approved an increase of 300 percent in electricity tariff for Band A consumers in the country.

The approval was contained in a document released by the commission, tagged “Eligible Customer Regulations 2024,” and signed by its chairman, Sanusi Garba.

Accordingly, power distribution companies (DisCos) were allowed to raise electricity tariffs for urban consumers to N225 ($0.15) per kilowatt-hour from N68 on April 1, 2024.

Under the arrangement, public hospitals and tertiary schools were placed under Band A, which made their electricity bills skyrocket, with most of them unable to pay the new tariffs.

The DisCos disconnected them, and life and learning in the university community deteriorated. Student protests greeted this development, which forced management to shut down the universities and send the students home.

Public hospitals, especially teaching hospitals, were not spared as they could not effectively serve their patients or run administrative operations.

Several appeals to the federal government to look into the plight of the affected institutions were ignored. To find their way out of the mess, vice-chancellors contemplated charging each student an N80,000 electricity fee, which was vehemently resisted.

Against this background, unveiling the 50 per cent subsidy for tertiary public hospitals and universities in Nigeria could be barely appreciated. We quickly state that had the authorities done their homework well, the confusion and tension that the tariff hike caused the institutions would have been avoided.

As a newspaper, we assert that including universities and hospitals in a commercial band was an incalculable error. Charging public universities and hospitals commercial rates is unfortunate. These institutions are not profit-oriented and cannot transfer such huge costs to those patronising them.

Though the 50 per cent subsidy is a step in the right direction, we consider it barely a scratch on the surface of these institutions’ enormous challenges. The genesis of their woes lies in the monthly exorbitant electricity bills ranging from N250 million to N300 million.

Even with the subsidy, some institutions will still spend between N125 million and N150 million monthly, which exceeds their total internal revenue. This means they must divert funds for other critical needs to pay for electricity.

This unsustainable financial burden threatens the very existence of these critical service-oriented institutions. The hospitals, in particular, are already recording low patient turnout due to the current economic hardship, which forces Nigerians to seek cheaper health services outside the public hospitals.

This not only defeats the purpose of these institutions but also compromises the health and well-being of Nigerians who rely on them. Ironically, these hospitals are meant to provide affordable healthcare, but the high electricity costs make them unaffordable for the people they are meant to serve.

Given the government’s dearth of funds, the electricity subsidy, like the fuel subsidy, is not sustainable and cannot help the institutions overcome their electricity challenges. It is an ad hoc measure that fails to address the root of the problem.

Instead of this hastily announced measure, the government should engage stakeholders to develop an affordable, adaptable, and sustainable electricity policy that is peculiar to the sector.

A sector-specific policy would consider these institutions’ unique needs and provide a long-term solution to their electricity challenges. It would also ensure that government’s scarce resources are allocated efficiently and effectively.

Furthermore, the government must ensure adequate funding for these institutions, regular payment, and adjustment of personnel remuneration. It is also crucial to upgrade their infrastructure, which has been neglected for too long. In addition, these institutions should explore alternative power sources to generate electricity and reduce their reliance on the national grid.

Prudence in resource management is also essential. The institutions must adopt cost-saving measures and optimise energy consumption to minimise waste.

While the 50 per cent subsidy is a welcome gesture, it is insufficient to address the scale of the problem. The government must take a more comprehensive approach to supporting these vital institutions, recognising their significance to Nigeria’s development and well-being. Anything less would be a disservice to the nation and her people.