Electricity Subsidy Hits N1.6trn As NERC Announces Tariff Adjustment

Electricity Subsidy payment has increased to N1.6trillion, according to the latest tariff adjustments announced by the Nigerian Electricity Regulatory Commission (NERC)

NERC Chairman, Engr. Sanusi Garba announced the development while briefing the power correspondents in Abuja on Wednesday.

He said, government is expected to pay over N100billion shortfall monthly in 2024, in line with its policy direction on electricity subsidy payment.

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Engr. Garba Said, following that arrangement, the approved cost-reflective tariff has been frozen for electricity customers.

With the new tariff, government is expected to pay N19.44 billion monthly for customers under the Abuja Electricity Distribution Company (AEDC) which will amount to N233.26 billion for the year.

AEDC had applied for N151.07 as cost reflective tariff per kilowatt hour but the Commission approved N120.88/kWh. Which means customers would be charged only N63.24/kWh while the government pays N58.12/kWh as subsidy.

For Ikeja Electric, the government will pay N238.20 billion (or 19.85 billion monthly) as subsidies in 2024. IKEDC had for N128.18/kWh as cost reflective tariff, the Commission approved N112.10/kWh. With the tariff freeze, consumers will be charged only N56.60/kWh while the government will pay N55.50/kWh as subsidy.

NERC also disclosed that for consumers in Enugu DisCo’s franchise area, the government will pay N129.92 billion pay (or N10.74 billion monthly) as subsidies in 2024. EEDC had applied for N155/kWh as cost reflective tariff, the Commission approved N128/kWh. With the tariff freeze, consumers will be charged N59/kWh while the government will pay N69.40/kWh as subsidy.

Benin DisCo, the Commission said consumers will enjoy a cumulative subsidy of N140.85 billion (or N11.74 billion monthly). The utility had applied for an astronomical N277.70/kWh as cost reflective but got approval of N126/kWh from the regulator. The new policy means consumers will pay N60.10/kWh while the government will pay N65.90/kWh as subsidy. This cuts across all the eleven distribution companies in Nigeria.

The NERC Boss said, the tariff order which was published on its website for the first time contains the appropriate tariff the Discos will be charging.

He explained that based on the tariff methodology of the commission, the commission carry out “biannual tariff review, 1st of January and 1st of July, every six months. And the reason for such review is in compliance with the law, the law says we should allow the investors to recover their efficient operating cost and reasonable return on investment. So, every six months we adjust what they are allowed to recover from customers in terms of the efficient operating cost. So the tariff determines the operating cost and the energy they deliver”.

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