THE Federal Government’s expenditure on electricity subsidies rose to N199.64 billion in December 2024, according to data from the Nigerian Electricity Regulatory Commission (NERC).
A new report titled December 2024 Multi-Year Tariff Order revealed a 2.76% increase in electricity subsidies, up from N194.26 billion in November.
NERC attributed the rise to factors such as an exchange rate pegged at N1,687.45 to the dollar, inflation climbing to 33.9%, and changes in available generation capacity, necessitating a minor review.
Despite these adjustments, the Federal Government retained electricity tariffs across all customer categories. Band A customers continued paying N209/kWh, while tariffs for Bands B to E remained frozen at their December 2022 rates.
Under this policy, the government is set to pay N29.10 billion in subsidies for Abuja DisCo customers, up from N27.86 billion in November, while Ikeja Electric customers will receive N26.68 billion in subsidies.
Regarding wholesale gas-to-power prices, NERC confirmed that the benchmark price remains at $2.42/MMBTU, as set by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
The Commission further clarified that approved tariffs would remain in effect but are subject to monthly adjustments based on factors such as inflation, the NGN/USD exchange rate, and gas-to-power prices.
This increase in electricity subsidies comes in the wake of President Bola Tinubu’s removal of petrol subsidies in May 2023, which caused petrol prices to surge from approximately N189 per litre to over N1,300 per litre.