The Federal Government has granted approval for a new cost-reflective tariff increase for electricity distribution companies in the country, revealing that a substantial subsidy of N1.6 trillion will be allocated in 2024. This information was disclosed by the Nigerian Electricity Regulatory Commission (NERC) during a press briefing in Abuja on Wednesday.
NERC specified that the new Multi-Year Tariff Order for Distribution Companies (DisCos), posted on its official website, would be effective from January 1, 2024. Sanusi Garba, the Chairman of NERC, highlighted the development, emphasizing that the federal government plans to expend 30 billion monthly, totaling N1.6 trillion, on electricity subsidies in the coming year.
Under the revised tariff structure, for a N150 electricity bill, the federal government will cover N90, with consumers responsible for the remaining portion. Garba provided specific subsidy allocations for various electricity distribution companies, including Enugu, Abuja, Yola, Benin, Ibadan, Eko, and Ikeja.
He clarified that adjustments to electricity tariffs would be carried out on a monthly basis to mitigate the impact of sudden rate hikes. Garba stated, “If we have determined that you should be paying N150, and the Federal Government says you should pay N60, it will pay the difference. Then that is what it is, and the government would now provide the money. One of the new things in the tariff order is, to avoid rate shock, we will now be doing the minor tariff review very frequently, like every month.”
Addressing previous rumors of an electricity tariff hike in early 2024, NERC denied the claim. The Minister of Power, Adebayo Adelabu, affirmed the government’s commitment to subsidizing electricity costs, revealing that N700 billion was spent on electricity tariffs in 2023.
Despite these subsidy efforts, Nigerians will contend with the challenges posed by the new electricity pricing template amidst headlines of heightened inflation, with headline and food inflation reaching 28.92% and 33.93%, respectively, in December 2023, as reported by the National Bureau of Statistics.