Electricity consumers on Band A feeders may encounter a potential tariff increase due to a significant rise in power subsidies, which reached N181.63 billion in September 2024. The Nigerian Electricity Regulatory Commission (NERC) noted that the government’s subsidy burden grew from N102.30 billion in May, raising concerns about another tariff hike if power generation costs do not stabilize.
Government records show that electricity subsidy has grown significantly over the past few months as the subsidy stood at N140.7 billion in April but surged up to N181.63 billion in September and this can be attributed to foreign exchange fluctuation and rising inflation rates
To maintain liquidity in the sector, the government ceased subsidies for Band A customers, who receive a minimum of 20 hours of electricity daily, raising their tariff to N225 per kilowatt-hour. This decision has led to significant backlash from various groups, including labour unions and educational and health institutions, as many have seen their electricity bills triple following the subsidy removal.
In May, the government reduced the Band A tariff to N206.80/kWh when the subsidy dropped to N102.30 billion. However, in early July, the tariff was increased to N209/kWh as the subsidy rose again to N158 billion in June.
As indicated by the NERC, the subsidy increased to N163.87 billion in July, N173.88 billion in August, and N181.63 billion in September. This trend has raised concerns about a potential tariff increase in the upcoming October Multi-Year Tariff Order, unless power generation costs decrease. The ongoing foreign exchange crisis has been identified as a key factor driving the electricity subsidy.
The Minister of Power, Adebayo Adelabu, expressed concern over the rejection of power by electricity distribution companies. He noted that power generation recently exceeded 5,000 megawatts, but 1,400 MW had to be reduced because the distribution companies (Discos) could not accept the supply. Adelabu emphasized the importance of the Discos accepting more energy to avoid grid collapse, especially as the government aims to increase generation to 6,000 MW by year-end.
