Interventionist payments in the power sector by the Federal Government as electricity subsidies increased to N199.64 billion in December 2024, according to data sourced from the Nigerian Electricity Regulatory Commission (NERC).
These payments are made amid worries over incidences of recurrent grid collapse and epileptic power supply across the country by most electricity consumers.
According to the newly released report by the regulator, ‘December 2024 Multi-Year Tariff Order,’ electricity subsidies rose by 2.76 per cent to N199.64 billion this month from N194.26 billion in November.
NERC explained that the rise in the exchange rate, which it pegged at N1,687.45 to the dollar, the increase in inflation to 33.9 per cent, and changes in available generation capacity necessitated the minor review.
The report showed that the Federal Government retained electricity tariffs across all customer categories.
While Band-A customers continued to pay N209/kWh,(kilowatts) tariffs for customers in Bands B to E were allowed to remain frozen at the rate payable from December 2022.
With the policy, the Federal Government is expected to pay N29.10 billion (up from N27.86 in November) as subsidies for consumers under Abuja DisCo, while consumers under Ikeja Electric would enjoy electricity subsidies of N26.68 billion from the government.
On wholesale gas-to-power prices, NERC stated: “The review maintains the benchmark gas-to-power price of $2.42/MMBTU based on the established benchmark price of gas-to-power by the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA”.
The Commission maintained that the “approved tariffs shall remain in force subject to monthly adjustment of pass-through indices including inflation rate, NGN/dollar exchange rate and gas-to-power prices”.
The development comes following the removal of petrol subsidies by President Bola Tinubu in May 2023.
The removal of petrol subsidies has since shot up petrol prices at the pump from around N189 per litre to above N1300 per litre.
With regard to epileptical power supply, the the ICIR reported lights out in most Nigerian universities despite being classified under the Band A supply channel which ought to get 20 hours daily power.
The report noted that hike in electricity tariffs have brought a new threat to the Nigerian tertiary education system; a sector almost totally crippled by poor funding, brain drains and insecurity.
The new tariffs, which in some cases are up to a 300 per cent increase to what institutions used to pay, now cast another dark pall on the nation’s campuses raising further concern over improved power supply despite electricity subsidies and tariff hike.
The ICIR, in April, reported that the Federal Government has said despite the new electricity tariff hike, approximately 85 per cent of Nigerians still benefit from electricity subsidy.
SOURCE: icirnigeria.org