Despite tariff increase, electricity subsidy jumps over 150% per cent to N633bn

Subsidy payments on electricity gulped over N633.30 billion in the first quarter of 2024, representing a 150.5 per cent increase from N252.76 billion in Q4, 2023.

The total amount spent on subsidy in the first three months of the year is also higher than N628.61 billion paid as a subsidy from January to December 2023.

Checks by our correspondents showed that subsidy gulped N36.02 billion in the first quarter, N135.23 billion in the second quarter, N204.6 billion in the third quarter and N252.76 billion in the fourth quarter of 2023.

According to the Nigerian Electricity Regulatory Commission quarterly report, the increase is due to the Government’s policy to harmonise exchange rates, while also issuing a policy directive that end-user customer tariffs remain at the rates that came into effect in December 2022.

It also blamed the high subsidy on the absence of cost-reflective tariffs across all electricity Distribution Companies.

“It is important to note that due to the absence of cost-reflective tariffs across all DisCos, the Government incurred a subsidy obligation of N633.30 billion in 2024/Q1, an average of N211.10 billion per month.”

This is despite the recent increase in tariff payable by electricity customers in Band A.

NERC, in April 2024 approved a 240 percent increase in electricity from N66 per kilowatt-hour to N225 per kilowatt-hour. This increase however affected only Band A customers, who benefit from 20 hours of electricity supply daily.

The DisCos however recorded a shortfall in revenue collection as compared to electricity billed, as the total revenue collected by all DisCos in the period was N291.62 billion out of N368.65 billion billed to customers.

Also, the total energy received by all DisCos was 7,171.93GWh while the energy billed to end-use customers was 5,769.52GWh, translating into an overall billing efficiency of 80.45 per cent.

Ikeja DisCo collected the highest revenue (N57.88 billion) in the period, followed by Eko DisCo at N48.74 billion. While Yola DisCo collected the least revenue at N5.46 billion.

Also, of the total revenue collected in the period, Abuja DisCo collected N48.60 billion, Ibadan DisCo collected N30.35 billion, Benin DisCo collected N22.46 billion, Enugu DisCo collected N21.24 billion, Port Harcourt DisCo collected N20.39 billion.

Others include Kano DisCo at N13.62 billion, Jos DisCo collected N13.29 billion, Kaduna DisCo collected N9.60 billion.