NERC may okay tariff hike as electricity subsidy hits N2.8tn

There are strong indications the Federal Government may consider the request by power distribution companies for a review of their tariff, as the government spending on electricity subsidy has risen to N2.8tn.

A new report by the Nigerian Electricity Regulatory Commission, obtained by our correspondent in Abuja on Sunday, indicated that past hikes in electricity tariffs by Discos saved the government from paying additional N1tn in subsidy to power firms annually.

The July 2023 NERC report was titled, ‘Overview of the Nigeria Electricity Supply Industry.’

Providing an update on the country’s tariff review journey, the commission stated that “between January 2020 and January 2023, tariff increased from 55 per cent of cost recovery to 94 per cent.

It added, “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.”

On subsidy payable, the NERC stated that subsidy (tariff shortfall) paid by the Federal Government between 2015 and 2022 rose to N2.8tn in December last year.

It added that between January and April this year, subsidy on electricity gulped N57bn, adding that the Service-Based Tariff scheme help in reducing the amount spent by the government on power subsidies.