The Federal Government of Nigeria incurred a subsidy obligation of ₦380 billion for electricity in the second quarter of 2024, representing a 40% decrease compared to the previous quarter, according to the Nigerian Electricity Regulatory Commission (NERC).
In its quarterly report released on Friday, NERC revealed that the Q2 2024 subsidy bill fell by ₦253.24 billion from ₦633.3 billion in Q1. This drop is attributed to the tariff hike for Band A customers implemented in April.
“Due to the absence of cost-reflective tariffs across all DisCos, the Government incurred a subsidy obligation of ₦380.06 billion in Q2 2024, which constitutes 52.51% of the total NBET invoice,” NERC stated. “This amounts to an average monthly expenditure of ₦126.69 billion.”
The report highlighted that the subsidy obligation reduced significantly from ₦633.3 billion (90.57% of the total GenCo invoice) in Q1 to ₦380.06 billion (52.51% of the total GenCo invoice) in Q2. The sharp reduction is linked to the government’s directive to revise tariffs for Band A customers, while tariffs for Band B to E customers remained unchanged at the rates set since December 2022.
NERC further explained that the government provides subsidies to cover the gap between the cost-reflective and allowed tariffs. These subsidies are applied to the generation costs payable by Distribution Companies (DisCos) through the DisCo’s Remittance Obligation (DRO) mechanism, ensuring ease of administration.
The commission also noted that, effective from April 3, tariffs for Band A customers—those receiving 20 hours of power supply daily—were increased to ₦225 per kilowatt (kW), up from ₦66. This change is expected to cut the government’s electricity subsidy by approximately ₦1.14 trillion for the 2024 fiscal year.
