The Nigerian Electricity Regulatory Commission (NERC) has announced that the federal government will allocate N1.6 trillion for electricity subsidy in 2024, during a press briefing in Abuja, Engr. Sanusi Garba, the Chairman of NERC, cited inflation and forex unification as contributing factors to the government’s decision to subsidize electricity.
Garba predicted that the government would disburse N120 billion monthly for this purpose. This figure represents a significant increase compared to the N700 billion paid as subsidy in the previous year, as stated by the Minister of Power, Adebayo Adelabu.
In 2022 and 2021, the government paid an annual subsidy of N150 billion when NERC issued the Multi-Year Tariff Order (MYTO). Despite the MYTO allowing for tariff reviews twice a year, the government has not implemented new tariff prices, covering shortfalls customers pay to the market.
Garba explained that economic conditions in the country have led to the continued subsidy, and the commission has introduced a new order to disclose the tariff DisCos are allowed to charge and the corresponding government subsidy. The chairman emphasized that although tariffs are not increasing, the tariff order will show transparency regarding charges and government subsidies.
To address the distribution companies’ (DisCos) obligations in purchasing and distributing electricity, Garba revealed that the commission would now conduct monthly reviews of electricity tariffs, allowing for minor adjustments based on inflation rates and other economic indicators. Additionally, measures are being taken to enable DisCos to access long-term funds for providing meters to customers.
