April 20, 2024
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DATA Infographic

Will Nigerians Pay More for Electricity or Get More Electricity?

Energy Afrique had on Wednesday reported that the Nigerian Senate rejected the federal government’s proposal aimed at removing the electricity subsidy, a move that would have inevitably led to a hike in electricity bills.

Senator Abbas Iya, representing Adamawa Central, moved the motion during the session on Wednesday, securing the backing of fellow lawmakers in attendance.

The lawmakers noted that it was absurd that electricity which could be inaccessible is being planned for an increase.

A review by this medium shows that while the country has witnessed an increased number of customers, it has been unable to match it up with increased electricity generation.

As of the third quarter of 2023, the available Gigawatt per hour for each of the customers patronizing distribution companies’ stood at 0.00149 GW/hr, falling from the 0.00197 GW/hr recorded in 2022.

This report examines the plan to increase the electricity tariffs and the issues around them.

Year GW/hour (in thousands) Customers (million) GW/hr (Per Customer)
2015 20,337 6,990,000 0.00291
2016 19,044 7,350,000 0.00259
2017 19,432 7,950,000 0.00244
2018 21,483 8,630,000 0.00249
2019 22,450 9,550,000 0.00235
2020 22,042 10,370,000 0.00213
2021 23,360 10,550,000 0.00221
2022 21,817 11,060,000 0.00197
2023 (as of Q3) 17,495 11,710,000 0.00149

The highest electricity production per hour (in Gigawatt) was last in 2015 when the GW/hr for each customer stood at 0.00291.

This challenge is coupled with the constant collapse of the national grid. In 2022, the country’s electricity grid collapsed five times in six months, leading to a blackout on each occasion.

Nigerian Senate Rejects Removal of Electricity Subsidy

Electricity Subsidy: A Renewed Channel of Fleecing the Nation?

With increasing customers, meaning more demands, the country continues to frail to meet up the pace.

The country still grapples with estimated billing. A substantial number of customers of Discos from Northern Nigeria are still on estimated billing.

Although the country has continued to show interest in funding the electricity sector, on several occasions, there have been failures to utilize even released funds meant to tackle electricity failure in the country. Below is a chart showing the Power Ministry’s capital budget between 2018 and 2023.

In 2020, as of (September), of the N128.005 billion capital appropriation, N68.672 billion was released and cash-backed. However, only N44.224 billion was utilised out of the amount released, according to data from the Budget Office of the Federation. The rest was not utilised.

Also of the N206.745 billion devoted to the capital expenditure for the power ministry, N164.307 billion was released and cash-backed. However, only N122.256 billion was utilised.

Also, in 2022, of the N296.637 billion appropriation, N144 billion was released, cash-backed, and utilised.

More Nigerians Pay More but do they get more?

Nigerian Electricity Regulatory Commission (NERC) had in December revealed that the federal government spent over N600 billion to subsidise electricity in 2023 alone.

Minister of Power, Adebayo Adelabu announced that it was very difficult to sustain subsidy on electricity adding that Nigeria must begin to move towards a cost-effective tariff model.

While the government argues on the need to remove “electricity subsidy”, Nigerians have lamented that they pay more but do not enjoy electricity.

While more customers would mean more money, data shows that true distribution companies have earned more from Nigerians over the years.

As of the third quarter of 2023, the revenue raked in for the year stood at N770.2 billion.

With falling electricity delivery, insufficient use of funds, and growing revenue, it remains unclear how the Nigerian government plans to increase electricity tariffs.

The government had in May removed the fuel subsidies which is blamed for the unprecedented surge in the prices of food and other commodities compelling Nigerians into a food crisis and a high cost of living.

 

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