By Milcah Tanimu
Recent data from the Nigerian Electricity Regulatory Commission (NERC) reveals that the Federal Government spent N375.8 billion on electricity subsidy between January and September of this year. Over the same period, power consumers paid a total of N782.6 billion for electricity. The figures indicate ongoing government subsidies during the first, second, and third quarters of 2023, reflecting challenges related to cost-reflective tariffs.
The breakdown of subsidy payments shows an increase from N36 billion in the first quarter to N135.2 billion in the second quarter and a further jump to N204.6 billion in the third quarter. The absence of cost-reflective tariffs is cited as the reason for the subsidy, with the government covering the gap between actual tariffs and the cost-reflective rates. This funding is applied to invoices from the Nigerian Bulk Electricity Trading Company (NBET) to be paid by distribution companies (Discos).
Consumers paid N247.09 billion, N267.86 billion, and N267.61 billion in the first, second, and third quarters of 2023, respectively, totaling N782.56 billion. Despite billing consumers a total of N1.06 trillion during the nine-month period, Discos collected N782.6 billion, reflecting a collection efficiency of 76.56 percent.
The increase in the government’s subsidy obligation in the third quarter is attributed to the policy of harmonizing exchange rates. The subsidy meant that Discos were expected to cover only 45 percent of the total invoice received from NBET during that period.
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