There are indications the Nigerian Government may consider yet another request by power distribution companies, DISCOS for a review of their tariff.
The government spending on electricity subsidy has been put at over N2.8 Trillion.
The yearly increases in power tariffs by the Federal Government through the NERC have been targeted at ending subsidies on electricity.
A report by the Nigerian Electricity Regulatory Commission, NERC in July this year showed that past increases in electricity tariffs by Discos saved the government from paying additional N1tn in subsidy to power companies annually.
The July 2023 NERC report was titled, ‘Overview of the Nigeria Electricity Supply Industry.’
In that report, the commission stated that “between January 2020 and January 2023, tariff increased from 55 percent of cost recovery to 94 percent.
“Without the tariff reviews that commenced in 2019, subsidies payable by the government would have grown to about N1tn per annum by 2023. Service-Based Tariff was instrumental in the transition to cost-reflective levels.”
The NERC stated that subsidy (tariff shortfall) paid by the Federal Government between 2015 and 2022 rose to N2.8tn in December last year.
Between January and April this year, subsidy on electricity consumed N57bn, it said the Service-Based Tariff scheme helped in reducing the amount spent by the government on power subsidies.
“Annual subsidy reduced from N528bn in 2019 to N144bn in 2022. Subsidy in 2023 year-to-date (January to April 2023) stood at N57bn.
“Service-Based Tariff was instrumental to the reduction of tariff subsidy. The financial burden of tariff subsidies between 2015 and 2022 stood at NGN2.8tn,” the NERC stated.
By mid-year, 11 power distribution companies in Nigeria had applied for the review of electricity tariffs to cope with inflationary pressures.
The Discos stated that their reasons for the rate review were premised on factors affecting the quality of service, operations, and sustainability of the companies.
Some power distribution companies announced on Sunday, June 25, 2023, that there would be an increase in tariff, projected to take effect from July 1, 2023.
The Discos, however, backtracked the next day after widespread criticisms. Meanwhile, the Nigerian Electricity Regulatory Commission has yet to approve the hike.
The announcement was something to worry about for electricity users as many prepaid consumers rushed to buy more electricity units in their meters, as they waited for the hike in tariff.
Commenting on the development, Adetayo Adegbemle, Executive Director at PowerUp Initiatives For Electricity Rights said it was time that all forms of subsidy on energy were stopped by the Federal Government.
He spoke as a guest on the News Central TV Breakfast Show on Wednesday.
He stated that the consumers are not paying for the true cost of power.
Power consumers say that subsidy on electricity should remain, since subsidy on Premium Motor Spirit, popularly called petrol, was removed in May. they are opposed to any move by the government or Discos to hike tariffs.