Electricity
FG Spends Over N5trn To Cover Electricity Subsidy In 10 Years
The federal government’s effort to subsidise electricity tariff for Nigerians has seen it cough out over N5 trillion in the last 10 years amounting to over 664 per cent growth, data from the Nigerian Electricity Regulatory Commission (NERC) has shown.
The data also revealed that the amount the government paid from 2015 to 2024 had a spike of 171 per cent from what it would pay the 11 Electricity Distribution Companies (DisCos) from 2023 to 2024.
A breakdown of the data showed that the government paid N225bn in 2015, which increased to N302bn in 2016. In 2017 it went up to N351bn, N440bn in 2018 and N528bn in 2019
While the subsidy came down in 2020 to N501bn, the introduction of Multi Year Tariff Order (MYTO) by the government reduced the subsidy in 2021 to N251bn.
Economic Confidential reports that MYTO is an order by NERC that allows the review of electricity tariff twice a year for a near cost reflective tariff.
The order also made the tariff to fall to N144bn in 2022, but the rising inflation and the devaluation of the dollar in 2023 pushed the subsidy up to N618bn.
The government said while the tariff cost was increased, consumers were made to pay the old price while it took the bills for the new charges that were occasioned by the economic headwind the country was facing.
With experts projecting Nigeria’s economy will go for the worse in 2024 before any succour can be felt later in the year, the government stated that it would pay N1.673trn during the year while electricity consumers continued to pay the old price.
The continuance of the subsidy is despite the NERC in its 2022 Market Competition Report stating that rich customers constituted the highest consumers of electricity in the country, thus enjoying more of the subsidy provided in the sector.
The report noted that end-user tariff subsidy in Nigeria was pro-rich as the top income group consumed more electricity than the low income group, thereby benefiting more from subsidy than the lower income earners.
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