The Nigerian Electricity Regulatory Commission (NERC) has announced that the federal government faced an electricity subsidy obligation of N380 billion in the second quarter (Q2) of 2024. In its quarterly report released on Friday, NERC noted that this subsidy bill decreased by N253.24 billion (40%) from the N633.3 billion recorded in the first quarter (Q1).
This reduction is attributed to the increased tariffs for Band A customers implemented in April. NERC stated, "Due to the lack of cost-reflective tariffs across all Distribution Companies (DisCos), the government incurred a subsidy obligation of ?380.06 billion, which represents 52.51% of the total NBET invoice for Q2 2024, averaging ?126.69 billion per month."
The report highlighted that the government's subsidy obligation fell from ?633.30 billion (90.57% of the total Generation Company invoice) in Q1 to ?380.06 billion in Q2. This significant decrease is a result of government policy changes to review tariffs for Band A customers, while tariffs for Bands B-E have remained unchanged since December 2022.
NERC emphasized that in the absence of cost-reflective tariffs, the government compensates for the gap between the cost-reflective and allowed tariffs through subsidies.