The Federal Government incurred an electricity subsidy obligation of ₦380bn in the second quarter (Q2) of 2024. According to the Nigerian Electricity Regulatory Commission’s quarterly report released on Friday, the electricity subsidy bill dropped by 40 per cent to ₦253.24bn in Q2, from ₦633.3bn recorded in Q1.
It stated: “It is important to note that due to the absence of cost-reflective tariffs across all DisCos, the Government incurred a subsidy obligation of ₦380.06 billion (52.51% of total NBET invoice) in 2024/Q2 (average of ₦126.69 billion per month),” NERC said.
“Between 2024/Q1 and 2024/Q2, the subsidy obligation of the government reduced by – ₦253.24 billion, from ₦633.30 billion (90.57% of total GenCo invoice) to ₦380.06 billion (52.51% of total GenCo invoice).
“The significant decrease in the subsidy obligation of the FGN is a result of the policy directive of the Government to implement reviews of tariffs charged to Band A customers while the tariffs for Band B-E customers remain frozen at the rates payable since December 2022.”
The commission maintained that for ease of administration, the subsidy is only applied to the generation cost payable by DisCos to NBET at source in the form of a DisCo’s Remittance Obligation (DRO).
it also noted that with the absence of a cost-reflective tariff, the government covers the resultant gap (between the cost-reflective and allowed tariff) in the form of subsidies.