Federal government’s electricity subsidies rise by 2.76% in December

The Nigerian Electricity Regulatory Commission (NERC) has revealed that electricity subsidies payable by the Federal Government increased by 2.76% in December, reaching ₦199.64 billion, up from ₦194.26 billion in November.

According to NERC’s December 2024 Multi-Year Tariff Order (MYTO), posted on its website, electricity tariffs across all customer categories remain unchanged. Customers in Band A continue to pay ₦209/kWh, while tariffs for Bands B to E remain frozen at rates set in December 2022.

Under the current policy, the Federal Government is expected to pay ₦29.10 billion in subsidies for consumers under Abuja Electricity Distribution Company (DisCo), up from ₦27.86 billion in November. Similarly, consumers under Ikeja Electric will receive ₦26.68 billion in subsidies.

NERC attributed the increase to the rising exchange rate, now pegged at ₦1,687.45 per dollar, an inflation rate of 33.9%, and changes in available power generation capacity.

Regarding wholesale gas-to-power prices, NERC stated: “The review maintains the benchmark gas-to-power price at $2.42/MMBTU, based on the established benchmark price set by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).”

The Commission emphasized that the approved tariffs would remain in force but are subject to monthly adjustments based on factors such as inflation, the NGN/USD exchange rate, and gas-to-power prices.

Commenting on the subsidies, the Executive Director of the Electricity Consumers Protection Centre, Chief Princewill Okorie, criticized the current system, stating, “Subsidies without adequate electricity supply are meaningless.”

He added, “The government cannot continue to fund DisCos that fail to provide required services. Power supply has been abysmal, and consumers are still being charged for electricity they did not consume through estimated billing practices by the DisCos.”