The Nigerian Electricity Regulatory Commission (NERC) has revealed that the Federal Government is projected to spend up to N1.6 trillion to subsidize electricity for end-users by the end of 2024. This amounts to approximately N120 billion per month, as stated by Garba Sanusi, the Executive Chairman of NERC during an interactive session with journalists in Abuja.
Sanusi expressed concern about the sustainability of such a significant subsidy. The NERC boss clarified that tariff reviews have been conducted over the past year, but what customers pay is a combination of regulation and policy.
He explained, “If we have determined that you should be paying N150, and the Federal Government says you should pay N60 and it will pay the difference, then that is what it is, and the government would now provide the money.”
Sanusi highlighted the new tariff order posted on their website, emphasizing the clear distinction between the amount customers should pay and the government’s subsidy. He also mentioned the implementation of more frequent minor tariff reviews, approximately every month, to avoid rate shock.
The tariff review provides insight into the subsidy for various electricity distribution companies. For instance, the subsidy for the Abuja Electricity Distribution Company (AEDC) stands at N233.32 billion annually, averaging N19.44 billion monthly. Similarly, the Enugu Electricity Distribution Plc (EEDC) annually receives a subsidy of N128.92 billion, averaging N10.74 billion monthly.
The NERC’s disclosure sheds light on the economic challenges associated with sustaining electricity subsidies, emphasizing the need for efficient and prudent management of resources in the power sector.
