NERC: FG Suspends Tariff Hike, Agrees To Pay N1.6trn Subsidy In 2024

The Nigerian Electricity Regulatory Commission, NERC, yesterday, released new electricity tariff regime for the eleven electricity distribution companies, DisCos, but said the utilities cannot implement the hike because the Federal Government has agreed to pay N1.6 trillion as subsidies for consumers in 2024 (a monthly average of N120 billion).

NERC stated that with the new policy electricity tariff will remain as it has been since December, 2022.

A selected analysis of the order according to DisCos showed that the government will in 2024 pay N233.26 billion (or N19.44 billion monthly) as subsidies for consumers under the Abuja Electricity Distribution Company, AEDC, franchise. NERC stated that AEDC had applied for N151.07 as cost reflective tariff per kilowatt hour but the Commission approved N120.88/kWh. With the tariff freeze, consumers would be charged only N63.24/kWh while the government will pay N58.12/kWh.

For electricity consumers served by Ikeja Electric, the government will pay N238.20 billion (or 19.85 billion monthly) as subsidies in 2024. IKEDC had for N128.18/kWh as cost reflective tariff, the Commission approved N112.10/kWh. With the tariff freeze, consumers will be charged only N56.60/kWh while the government will pay N55.50/kWh as subsidy.

NERC also disclosed that for consumers in Enugu DisCo’s franchise area, the government will pay N129.92 billion pay (or N10.74 billion monthly) as subsidies in 2024. EEDC had applied for N155/kWh as cost reflective tariff, the Commission approved N128/kWh. With the tariff freeze, consumers will be charged N59/kWh while the government will pay N69.40/kWh as subsidy.

Benin DisCo, the Commission said consumers will enjoy a cumulative subsidy of N140.85 billion (or N11.74 billion monthly). The utility had applied for an astronomical N277.70/kWh as cost reflective but got approval of N126/kWh from the regulator. The new policy means consumers will pay N60.10/kWh while the government will pay N65.90/kWh as subsidy.

Speaking to journalists in Abuja, NERC Chairman, Engr. Sanusi Garba explained that though the new Multi-Year Tariff Order 2024 has approved increases in rates, the decision of the Federal Government means consumers will not be paying higher price for electricity.

He explained: “For the first time, we have published what each DisCo should charge and we have also published the amount they are allowed to charge based on government policy because the government has decided to in the meantime continue to pay subsidies.

“If you check the order, you will see that tariffs are not going up but you will see what the DisCos should have been charging and you can also see in the tariff order the amount of subsidies the government will be paying to cover the gap”, he added.