Fresh electricity tariff hike looms as Nigeria’s monthly power subsidy hits N181.63bn

Another electricity tariff hike may be introduced in October 2024 by the Nigerian Government as the country’s monthly power subsidy rose to N181,63 billion in September.

This comes as the electricity subsidy by the Federal Government rose to N181,63 billion in September from N102.30 billion in May.

In the last three months, the government paid N163.87 billion in July, N173.88bn in August, and N181.63bn in September 2024.

This comes after the Nigerian Electricity Regulatory Commission announced the removal of subsidies in areas categorized as Band A feeders on April 3, 2024.

NERC had revealed that the monthly electricity subsidy at that time stood at N140.7 billion.

Consequently, NERC approved an electricity tariff hike for electricity consumers enjoying at least 20 hours of electricity daily, raising their tariff to N225 per kilowatt-hour.

However, the decision generated serious outcries among Nigerians, including labour unions, educational and health institutions, whose electricity bills tripled following the removal of the subsidy.

In May when the subsidy figure dropped to N102.30 billion, the government slashed the Band A tariff to N206.80/kWh.

NERC said the reason for the reduction was due to a fall in the exchange rate of the Dollar to the Naira.

However, the tariff was jerked to N209/kWh in early July as the subsidy rose again to N158 billion in June.

Accordingly, in the period under review, the NERC put the dollar exchange rate at N1,494.1 in July; 1,564.3 in August; and N1601.5 in September.

As of September, the NERC maintains the benchmark gas-to-power price of $2.42/Million British Thermal Units based on the established benchmark price of gas-to-power by the Nigerian Midstream and Downstream Petroleum Regulatory Authority in line with Section 167 of the Petroleum Industry Act 2021.

This indicates the rising cost of power generation in Nigeria.

The development coupled with the country’s inflation rate which stood at 32.15 percent in August 2024 had fueled speculations that there may be another tariff increase in the October Multi-Year Tariff Order unless the cost of power generation drops.