FG launches pay-as-you-go model for electricity payments
The federal government has officially announced plans to implement a pay-as-you-go payment model for electricity consumption, aiming to eliminate government-sponsored subsidies within the sector.
This was made known by Minister of Finance and Coordinating Minister of the Economy, Wale Edun, during a media briefing in Abuja on Thursday.
Edun stated, “The transition to a pay-as-you-go approach will take effect after the government successfully clears the outstanding N4 trillion liability owed to various investors in the energy sector.”
He explained that this step is part of the administration’s strategy to tackle past debts and transition the electricity sector to a fully deregulated environment.
During the briefing, the minister also disclosed that revenue allocation to sub-national governments has increased from N2.1 trillion to over N7 trillion in the first half of the year.
“This amount includes monthly revenues, 1.8% of GDP, and backlogs of other unpaid statutory allocations to the states,” he noted.
Edun emphasized the need for a sustainable approach in managing electricity payments: “Going forward, we are focused on ensuring that collections increase while adopting a pay-as-you-go system that does not leave the government with a bill to pay.”
He criticized previous power purchase agreements that imposed financial burdens on the government, stressing that, “The goal is to replace these agreements with investments in power generation that do not require government guarantees for payment.”
This initiative is expected to create a more sustainable and efficient electricity market while alleviating the financial pressures currently faced by the government.
Source: LEADERSHIP
