Electricity Subsidy: Hospitals, Tertiary Institutions May Gulp N188bn
The Federal Government may spend approximately N188.25 billion annually to subsidise electricity supply for about 75 public tertiary hospitals and 300 educational institutions across the country.
This follows the Federal Government’s approval of a 50 per cent subsidy for electricity consumed in public hospitals and tertiary education institutions nationwide.
In April, the Nigerian Electricity Regulatory Commission (NERC) announced an increase in electricity tariff paid by Band A customers from N68/KWh to N225/KWh, which was a 300 per cent increment.
Band A customers enjoy electricity supply for at least 20 hours per day. Most public tertiary hospitals and education institutions in Nigeria are under this band.
However, many of those institutions had cried out over soaring electricity bills following the new policy.
After a report on the excruciating effects of these unaffordable bills, the Federal Government, on Thursday, approved a 50 per cent subsidy for the electricity consumed in hospitals and universities.
The decision follows a promise by the Minister of Power, Adebayo Adelabu, that the Federal Government would subsidise electricity in hospitals and government-owned education tertiary institutions, even if they are on Band A feeders.
When he was making the announcement recently in Ibadan, Adelabu, said the government would not subsidise private businesses operating in these hospitals.
The minister disclosed that the government was aware that hospitals and universities were having challenges paying the bills.
However, he said the Federal Government was planning to meter all businesses running in each of the institutions to prevent paying subsidies to private businesses.
“We know they are development institutions, they are social institutions. But inside the health and educational institutions, there are private businesses hiding under them. These people charge their customers commercially and they expect to be subsidised because they are located within the territories of these institutions.
“We said no, go and do a proper search and meter everybody. For the ones that are properly health and education-related, we are ready to subsidise them, even if they are on Band A.
“We are compiling our data, DisCos will collect a certain amount, and the government will pay the balance. But we must get the data right so that we are not subsidising a private business that is charging its customers commercially. That will be an abnormal profit and it is unfair,” he stated.
The Ministry of Power has yet to give details of the subsidy arrangement for the institutions.
The Minister of Power’s spokesman, Bolaji Tunji, told The PUNCH that he was aware of the Federal Government’s effort to provide captive power to health and educational institutions.
He noted that the subsidy would be on the essential services of those institutions.
“You know that within some of these institutions, there are some commercial entities and privately run businesses that are charging customers for services rendered. So the government would not extend the subsidy to these entities.
“That is why the minister of power is saying that we need to get accurate data from these institutions for them to enjoy the subsidy and be charged accordingly,” Tunji stated.
He added that the programme would come under an initiative of the Federal Government of Nigeria being implemented by the Rural Electrification Agency to provide off-grid, dedicated, and independent power plants.
The agency is also empowered to rehabilitate existing distribution infrastructure, to supply clean and reliable power to 37 federal universities and seven affiliated university teaching hospitals.
“In addition, it will provide street lighting for illumination and safety, as well as a world-class renewables training centre at each of the beneficiary institutions, and conduct STEM internships for selected female students,” he disclosed.
Asked if the 50 per cent subsidy claim was correct, Tunji retorted, “What the minister of power said was there would be subsidy and could be as much as that or lower. So if the minister of state for health said so, then further clarification must be sought.”
The Minister of State for Health and Social Welfare, Dr Tunji Alausa, announced on Thursday that the Federal Government had approved the 50 per cent electricity subsidy for public hospitals.
According to Alausa, the gesture aims to reduce the running costs for public hospitals and alleviate the impact on patients.
Alausa stated this at the National Neo-Psychiatric Hospital in Barnawa, Kaduna, while unveiling the Electronic Health Records and Alternative Power Supply at the Lawal Jafaru Isah Emergency Complex.
Economic Confidential reports that the 75 tertiary health institutions that will benefit from this gesture, include federal medical centres and teaching hospitals owned by the federal and state governments.
Findings indicated that the Federal Government would spend about N50m to augment the electricity bills of each of these hospitals, which translates to N3.75bn in a month and N45bn in 12 months.
For the education institutions; the public universities in the country numbering 125, polytechnics 94, and colleges of education 81, the FG is likely to commit approximately N11.94bn monthly and N143.25bn annually as subsidy.
The Rector of Yaba College of Technology, Lagos, Dr Ibraheem Abdul, said it was a welcome offer, adding that the institution had yet to be notified of the subsidy by the FG.
With the removal of subsidies, the bills of many health institutions tripled, making it difficult for them to meet their obligations.
Our correspondents gathered that some tertiary hospitals pay as much as N300m per month to foot their electricity bills.
The figure, they said, rose from less than N100m before the tariff review.
In July 2023, Chairman of the Committee of Chief Medical Directors of Federal Tertiary Institutions, Prof. Emem Bassey, stated that each tertiary hospital in the country spent an estimated N30m monthly on power supply from the national grid and an additional N40m on diesel for backup power.
Bassey noted, ‘A few hospitals are connected to the national grid, but even those are charged at maximum demand rates, which are quite high.
“Hospitals like the University College Hospital, Ibadan, end up spending about N70m on power monthly, while an average hospital connected to the national grid spends between N30m and N40m monthly.”
In April, the UCH in Ibadan was disconnected by the Ibadan Electricity Distribution Company over unpaid N450m debt.
Last month, the management of the College of Medicine of the University of Lagos and the Lagos State University Teaching Hospital lamented over what they described as an outrageous electricity bill from the Eko Electricity Distribution Company.
The healthcare institutions said they were jointly presented with a bill of about N280m for May instead of the less than N100m they used to pay.
For 10 days, the electricity supply to the two health institutions was disconnected, leading to a protest by medical students.
The President of the Nigerian Medical Association, Prof. Bala Audu, said the move by the government to subsidy the electricity consumed in hospitals across the nation was commendable.
He, however, stated that the government should also consider subsidising electricity for private hospitals.
“This was one of the things we discussed in our just concluded national executive council meeting. This should not be just for the public sector but also for the private sector.
“The private sector is treating a lot of patients. So, they should be considered as well,” he said.
