The Nigerian Electricity Regulatory Commission (NERC) has revealed that monies paid by the Nigerian Government as electricity subsidies rose to N199.64 billion in December 2024.
The newly released report, titled ‘December 2024 Multi-Year Tariff Order’, revealed that electricity subsidies increased by 2.76 per cent, up from N194.26 billion in November.
NERC attributed the rise to factors such as the increase in the exchange rate, pegged at N1,687.45 to the dollar, inflation climbing to 33.9%, and adjustments in available generation capacity. These changes necessitated a minor review.
Tariffs Retained
The report indicated that the Federal Government retained electricity tariffs across all customer categories. Band-A customers continued to pay N209/kWh, while tariffs for Bands B to E remained frozen at rates set in December 2022.
Under this policy, the government is expected to pay N29.10 billion in subsidies for consumers under Abuja DisCo, an increase from N27.86 billion in November. Similarly, consumers under Ikeja Electric will receive N26.68 billion in subsidies.
Wholesale Gas-to-Power Prices
Regarding wholesale gas-to-power prices, NERC stated:
“The review maintains the benchmark gas-to-power price of $2.42/MMBTU based on the established benchmark price of gas-to-power by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).”
NERC further clarified that “approved tariffs shall remain in force, subject to monthly adjustments of pass-through indices, including the inflation rate, NGN/dollar exchange rate, and gas-to-power prices.”
Context of Subsidy Policy
The increase in electricity subsidies follows the removal of petrol subsidies by President Bola Tinubu in May 2023. The removal led to a sharp rise in petrol prices, which surged from around N189 per litre to above N1,300 per litre.
This development highlights the Federal Government’s ongoing efforts to address energy sector challenges while balancing the economic impact on consumers.
