Politics
Breaking News: Electricity Subsidy Consumes N376 Billion, while Consumers Contribute N783 Billion
Breaking News: Electricity Subsidy Consumes N376 Billion, while Consumers Contribute N783 Billion
The Nigerian Federal Government allocated a total of N375.8 billion for electricity subsidies between January and September this year, while consumers bore the financial brunt by contributing N782.6 billion during the same period. Data acquired on Sunday from the Nigerian Electricity Regulatory Commission (NERC), a federal agency, disclosed that subsidies were extended in each quarter of 2023.
Despite power distribution companies billing a nationwide total of N1.06 trillion over the nine months, actual collections amounted to N782.6 billion, even amid widespread blackouts in various regions of Nigeria.
Breaking down the subsidy payments, it was noted that the government provided N36 billion in the first quarter, N135.2 billion in the second quarter, and a substantial increase to N204.6 billion in the third quarter. Figures for the fourth quarter were not available as the year is still ongoing.
In its recently released third-quarter 2023 report, NERC attributed the need for subsidies to the absence of cost-reflective tariffs. The government covered the tariff shortfall funding, targeting the Nigerian Bulk Electricity Trading Company (NBET) invoices payable by distribution companies (Discos).
Due to the lack of cost-reflective tariffs across all Discos, the government’s subsidy obligation surged to N204.59 billion in 2023/Q3, reflecting a 51.3% increase compared to N135.23 billion in 2023/Q2. This rise was largely influenced by the government’s policy to harmonize exchange rates.
In the third quarter of 2023, Discos were expected to cover only 45% of the total invoice from NBET, with the Minimum Remittance Obligation (MRO) limited to NBET, and the Market Operator (MO) allowed to recover 100% of its revenue requirement from Discos for subsidy administration.
Examining consumer payments, the power regulator’s quarterly reports revealed that consumers contributed N247.09 billion, N267.86 billion, and N267.61 billion in the first, second, and third quarters of 2023, respectively, totaling N782.56 billion.
Throughout the three quarters, Discos billed consumers N349.55 billion, N354.61 billion, and N359.38 billion, resulting in a cumulative bill of N1.06 trillion over the nine-month period.
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Source; Bushradiogist
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