Electricity subsidy jumps by 220%

The Federal Government’s electricity tariff subsidy jumped from N610bn in 2023 to N1.94tn in 2024

This represents a 219.67 per cent increase in yearly subsidy funding, despite the Band A tariff hike of April 2024.

The Nigerian Electricity Regulatory Commission and analysts observed that the subsidy figures rose following the floating of the naira by President Bola Tinubu in June 2024 as well as the removal of fuel subsidies, leading to high inflation rates.

According to NERC, the Federal Government incurred a total electricity tariff subsidy of N1.94tn in 2024 to cover the shortfall between the cost-reflective tariffs and the actual tariffs approved for customers. It was reported that the Federal Government paid only N371.34m out of the N1.94tn subsidy obligation for 2024; this translates to 0.019 per cent settlement.

“It is important to note that due to the absence of cost-reflective tariffs across all DisCos (distribution companies) in 2024, the government incurred a subsidy obligation of N1.94bn (62.59 per cent of total NBET invoice) during the year, which translates to an average of N161.85bn per month. This subsidy obligation of the FG is largely attributable to the FG’s policy to freeze allowed tariffs paid by customers despite the increase in cost-reflective tariffs,” the 2024 report read.

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