- To start monthly review of tariff
The Nigerian Electricity Regulatory Commission (NERC) has stated that the federal government will pay N1.6trn in electricity subsidy in 2024.
Speaking during a press briefing yesterday in Abuja, the Chairman of NERC, Engr. Sanusi Garba, said the attendant effect of inflation and forex unification was among the reasons for the government’s payment to subsidise electricity.
He predicted that the government would be paying N120bn monthly.
Daily reports that the increase will be over N500bn higher that what was paid as subsidy in 2023.
Recall that the Minister of Power, Adebayo Adelabu, had stated that the government paid N700bn as subsidy last year.
This also dwarfed the annual N150bn the government had paid in 2022 and 2021 when the Multi Year Tariff Order (MYTO) was issued by NERC.
While the MYTO allows for the review of tariffs twice every year, the government has not announced new tariff prices as it has been footing the shortfalls customers are paying to the market.
According to Garba, the economic situation in the country made the government continue paying the subsidy.
“For the first time, we are publishing what they should charge, we are also publishing the amount they are allowed to charge based on government policy. The government has decided for now, arising from the cost of living crises and so many things to, in the entire, continue to subsidise electricity.”
He added that the commission has introduced a new order that will allow the public to see the tariff that the DisCos are allowed to charge and what the government is paying.
“In the order, you will see that tariffs are not going up but you will see what the DisCos are charging and the amount of subsidy the government will be providing to cover the gap. We have also included in the tariff order some provisions that will ensure the distribution companies pay what they are obligated to pay. This is because the DisCos are in the business of buying electricity from NBET and distributing it to customers.”
He added that the commission would now be reviewing electricity tariff monthly to enable the DisCos charge market reflective tariff.
“One of the new things in the tariff is that to avoid rate shock, we will be doing minor reviews more frequently, like monthly reviews, so you can see tariffs going up and down depending on inflation rate among other macroeconomic indices. So at any moment the government takes a position on subsidy, we will take into account that policy input.”
He added that the government is taking a new measure to enable DisCos to get access to long term funds to provide meters for its customers.
