‘New electricity tariff to cut down subsidy by N1.14trn in 2024’

The Nigerian government’s move to revise electricity tariffs is expected to cut down the subsidy for the fiscal year 2024 by approximately N1.14 trillion, and also to deliver a 52 per cent cut in monthly subsidy expenses.

According to the Vice Chairman of the Nigerian Electricity Regulatory Commission (NERC), Musliu Oseni, the Federal Government has shown intentions of transitioning to a targeted subsidy regime to alleviate the effects of macroeconomic changes.

He said with the new approved tariffs, subsidies for the 2024 fiscal year are expected to reduce by about N1.14 trillion in furtherance of the Federal Government’s realignment of the subsidy regime.

“The overarching objective of the commission in the consideration of the tariff application is the creation of a financially sustainable electricity market providing adequate and reliable power supply to drive the Nigerian economy.

“The commission, upon due consideration of the tariff applications, has approved revised rates affecting only customers classified under Band Serv category which is about 15 per cent of the customer population,” he said.

Oseni explained that the commission undertook a detailed assessment of the tariff proposals submitted by the 11 Electricity Distribution Companies (DisCos), adhering to its established regulations and business rules.

He noted that the empirical service data had confirmed that the class A customers had truly received the committed level of service, adding that a mechanism for enforcement and compensation has been set up to address service failures.

“We wish to assure all Nigerians that the commission working in collaboration with the policymakers remains committed towards providing adequate and reliable electricity to all citizens. This is as we work diligently with state governments to deliver on the gains of the Electricity Act 2023,” Oseni added.

Recall that the federal government through the Nigerian Electricity Regulatory Commission (NERC) raised the electricity prices to N225/KWh for consumers classified as Band A.

This is contained in a press statement by the Vice Chairman of NERC Musliu Oseni on Wednesday.

Oseni stated that these customers represent 15 percent of the nation’s 12 million electricity consumers.

He added that because the required electricity supply hours were not met, the commission shifted some customers from Band A to B.

The reduction will see the current N261.2 billion figure fall to around N125.94 billion, unlocking a significant N135.26 billion in monthly fiscal savings.

These adjustments represent a significant shift in the government’s spending on electricity subsidies across the nation, aiming to align the cost of power more closely with the actual supply and demand dynamics in the market.

The reduction in subsidy spending, particularly when economic pressures are mounting due to other macroeconomic factors, could have far-reaching implications for both consumers and the power sector.