In the first quarter of 2024, Nigeria’s electricity subsidy payments skyrocketed to over ₦633.30 billion, representing a 150.5% increase from the ₦252.76 billion recorded in Q4 2023.
This total also surpasses the ₦628.61 billion spent on subsidies throughout the entire year of 2023, BusinessDay reported.
According to the Nigerian Electricity Regulatory Commission’s (NERC) quarterly report, the significant increase in subsidy payments is attributed to the government’s policy to harmonize exchange rates and maintain end-user customer tariffs at the levels set in December 2022.
The report highlights that the lack of cost-reflective tariffs across all electricity Distribution Companies (DisCos) led to this substantial subsidy expenditure.
“It is important to note that due to the absence of cost-reflective tariffs across all DisCos, the Government incurred a subsidy obligation of ₦633.30 billion in Q1 2024, averaging ₦211.10 billion per month,” the report stated.
Despite a recent tariff increase for customers in Band A, which saw rates rise from ₦66 per kilowatt-hour to ₦225 per kilowatt-hour for those receiving 20 hours of electricity daily, subsidy costs remained high.
The discrepancy between the revenue collected by DisCos and the amount billed to customers further exacerbated the situation.
In Q1 2024, the total revenue collected by all DisCos was ₦291.62 billion out of ₦368.65 billion billed, indicating a collection shortfall.
The total energy received by all DisCos was 7,171.93 GWh, while the energy billed to end-use customers was 5,769.52 GWh, resulting in an overall billing efficiency of 80.45%.
Among the DisCos, Ikeja DisCo collected the highest revenue at ₦57.88 billion, followed by Eko DisCo with ₦48.74 billion.
Yola DisCo collected the least revenue at ₦5.46 billion.
Other notable collections included Abuja DisCo at ₦48.60 billion, Ibadan DisCo at ₦30.35 billion, and Benin DisCo at ₦22.46 billion.
