The Nigerian Electricity Regulatory Commission (NERC) has revealed that the federal government incurred an electricity subsidy of ₦380 billion in the second quarter of 2024. This figure marks a significant 40% reduction from the ₦633.3 billion recorded in the first quarter of the year.
In its latest quarterly report released on Friday, NERC attributed the sharp drop in the subsidy to the government’s directive to adjust electricity tariffs for Band A customers, while maintaining the tariff freeze for Band B to E customers at the rates set since December 2022.
The report highlighted that the subsidy obligation in Q2 2024 accounted for 52.51% of the total Nigerian Bulk Electricity Trading (NBET) invoice, with the government covering an average of ₦126.69 billion monthly during the quarter. In contrast, the first quarter saw the subsidy amount to 90.57% of the total Generation Company (GenCo) invoice.
NERC explained that the continued absence of cost-reflective tariffs for all Distribution Companies (DisCos) remains a challenge, forcing the federal government to bridge the gap between the actual cost of electricity generation and the allowed tariff through subsidies.
For easier administration, the report clarified that the subsidy is applied directly to the generation cost payable by DisCos to NBET, through what is termed the DisCo’s Remittance Obligation (DRO).
