The Nigerian Electricity Regulatory Commission (NERC) has said that the monthly spending of the Nigerian Government on electricity subsidy obligation has reached N1.91 trillion in the first 11 months of 2024.
The NERC said in a report that power distribution companies collected a total revenue of N1.23tn during the first nine months of 2024, exceeding the total revenue generation of N1.08tn in 2023.
An analysis of figures from the power sector regulator’s monthly supplementary order posted on its website on Sunday indicated that electricity subsidies continued to increase every quarter throughout the year despite the elimination of subsidies for Band A customers.
The amount incurred between January and November 2024, represents an increase of 204.15 per cent or N1.283tn from N628.61bn recorded in 2023.
A breakdown showed that N633.30bn was incurred as electricity subsidy in the first three months of 2024. It, however, reduced to N380bn in the second quarter.
In the third quarter, spanning July, August and September, the amount surged by 36.46 per cent to N518.55bn. The subsidy costs for October and November were N380.06bn despite several incidents of the national grid collapse.
The absence of cost-reflective tariffs was said to have caused the Nigerian Government to undertake to cover the resultant gap between the cost-reflective and allowed tariff in the form of tariff subsidies.
The Minister of Power, Chief Adebayo Adelabu, had stated that the government would subsidise the power sector with N2.9tn in 2024 without the increase in electricity tariff.
For ease of administration, the subsidy is only applied to the generation cost payable by Discos to NBET at source in the form of Disco’s Remittance Obligation.
The DRO, it was learnt, represents the total Genco invoice that is billed to the Discos by NBET based on what the allowed Disco tariffs can cover.
The transmission and administrative service costs payable by Discos to the Market Operator, an arm of the Transmission Company of Nigeria, are recovered 100 per cent.
However, it should be noted that the power generation cost is a major component that guarantees electricity generation and supply across the country.
In November, a total cost of N67.095bn was incurred as generation costs but Discos were allowed to recover N39.24bn.
