The Federal Government has spent about N2.8 trillion subsidizing electricity in the last seven years, the Nigerian Electricity Regulatory Commission (NERC) has said.
The commission’s report for the month of July 2023 indicates N57 billion was spent subsidizing electricity between January and April this year.
NERC notes that the amount would have been higher but for the Service-Based Tariff scheme.
The NERC, in an attempt to justify a hike in tariff, claimed that past hikes in electricity tariffs by the DisCos saved the Government from paying an additional N1 trillion in subsidies to power firms annually.
The July 2023 NERC report was titled, ‘Overview of the Nigeria Electricity Supply Industry.’
Providing an update the commission stated that between January 2020 and January 2023, the tariff increased from 55 percent of cost recovery to 94 percent.
It added that between January and April this year, subsidies on electricity gulped N57 billion, adding that the Service-Based Tariff scheme helped in reducing the amount spent by the government on power subsidies.
“Annual subsidy reduced from N528 billion in 2019 to N144 billion in 2022. Subsidy in 2023 year-to-date (January to April 2023) stood at N57 billion.
“Service-Based Tariff was instrumental to the reduction of tariff subsidy. The financial burden of tariff subsidies between 2015 and 2022 stood at NGN2.8 trillion,” the NERC stated.
The yearly hikes in power tariffs by the Federal Government (FG) through the NERC have been targeted at ending subsidies on electricity.
According to the report, DisCos stated that their reasons for the rate review were premised on factors affecting the quality of service, operations, and sustainability of the companies.
