Electricity: Nigeria Govt spends N375.8bn on subsidies, consumers pay N782.8 in nine months


The federal government spent N375.8 billion on electricity subsidies from January to September this year, as power consumers paid N782.6 billion for the commodity during the same period.

The Nigerian Electricity Regulatory Commission, NERC, disclosed this in its first, second, and third quarters of 2023 reports.

According to the report, power distribution companies billed electricity users a total of N1.06 trillion nationwide during the nine months, during which they collected N782.6 billion.

Providing reasons for the subsidy in its just-released third-quarter 2023 report, the NERC stated that it was due to the absence of cost-reflective tariffs.

It said, “In the absence of cost-reflective tariffs, the government undertakes to cover the resultant gap (between the cost-reflective and allowed tariff) in the form of tariff shortfall funding. This funding is applied to the NBET (Nigerian Bulk Electricity Trading Company) invoices that are to be paid by Discos.

“The amount to be covered by the Disco is based on the tariff that they are allowed to charge and set out as their Minimum Remittance Obligation in the periodic Tariff Orders issued by the Commission.

“It is important to note that due to the absence of cost-reflective tariffs across all Discos, the government incurred a subsidy obligation of N204.59 billion in 2023/Q3 (average of N68.20bn per month), which is an increase of N69.37 billion (+51.3 per cent) compared to the N135.23 billion (average of N45.08 billion per month) incurred in 2023/Q2; this increase is largely attributable to the government’s policy to harmonise exchange rates.

“The rise in the government’s subsidy obligation meant that in 2023/Q3, Discos were only expected to cover 45 per cent of the total invoice received from NBET. For ease of subsidy administration, the MRO is limited to NBET only with the MO (Market Operator) being allowed to recover 100 per cent of its revenue requirement from the Discos.”

On the payment of electricity bills, it was observed from the three quarterly reports of the power regulator that consumers paid N247.09bn, N267.86bn and N267.61 billion in the first, second and third quarters of 2023, respectively.

This represents a total of N782.56 billion.

Accordingly, during the first, second, and third quarters, the electricity bills from Discos to consumers were N349.55 billion, 354.61 billion, and N359.38 billion, respectively.

The total bill for the nine months was N1.06 trillion.

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