FG Faces ₦3.2 Trillion Electricity Subsidy Bill, Says NERC

FG Faces ₦3.2 Trillion Electricity Subsidy Bill, Says NERC

NERC Chairman Sanusi Garba has cautioned that reverting recent electricity tariff hikes could burden the Federal government with a staggering ₦3.2 trillion subsidy in 2024. This declaration came during a crucial meeting with stakeholders convened by the House of Representatives Committee on Power, as reported by Naija News.

Garba underscored the critical need for substantial and continuous investment in Nigeria’s power sector to avert potential national energy security crises. He outlined the sector’s severe financial strains, citing issues like foreign exchange fluctuations and unpaid gas bills, crucial for sustaining power generation.

“Before the tariff review, Distribution Companies (DISCOs) were only mandated to pay 10 percent of their energy invoices,” Garba elaborated.

This financial instability has led to a notable decline in gas supply and power generation, increasing the likelihood of system collapses. NERC Vice Chairman Musiliu Oseni echoed support for the recent tariff adjustments, emphasizing their necessity in preventing a complete sector shutdown.

Oseni highlighted the stark reality of underfunded subsidies, with only N185 billion of the N645 billion allocated for 2023 being fulfilled, resulting in a significant shortfall.

In response, House Committee on Power Chairman Victor Nwokolo (PDP, Delta) acknowledged the complexity of the situation. He stated that the committee is gathering input, especially from the Transmission Company of Nigeria and Generation Companies, absent from the meeting.

“The recent tariff revisions were long overdue since 2022,” Nwokolo stated, attributing the sector’s financial strain partly to unforeseen demands from Nigeria’s population growth and the consequent infrastructure expansion needs.

Discussions also addressed challenges posed by fluctuating exchange rates and security threats to power installations, elevating operational costs.

Nwokolo emphasized that any decision to halt tariff increases would require full resolution from the House of Representatives, not just at the committee level.

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