The Federal Government’s expenditure on electricity subsidies reached N1.91 trillion in the first 11 months of 2024, according to a report by the Nigerian Electricity Regulatory Commission (NERC). This marks a significant rise compared to the N628.61 billion recorded in 2023, representing a 204.15% increase. The report also highlighted that power distribution companies (Discos) generated N1.23 trillion in revenue during the first nine months of 2024, surpassing the N1.08 trillion generated in 2023.
The analysis from NERC’s supplementary order showed that despite the removal of subsidies for Band A customers, electricity subsidy costs continued to rise each quarter. Between January and March 2024, subsidies amounted to N633.30 billion, before dropping to N380 billion in the second quarter. However, costs surged again in the third quarter to N518.55 billion and reached N380.06 billion in October and November, despite challenges such as national grid collapses.
Efforts to transition to cost-reflective tariffs have been hindered by the Federal Government’s commitment to covering the gap between actual and cost-reflective tariffs. This gap continues to increase with rising generation costs, which climbed from N63.8 per kilowatt-hour in January to N117.27 in November. While customers in Band A pay the full cost of electricity, those in Bands B to E receive subsidies covering up to 67% of their costs, with the government struggling to meet its subsidy obligations, according to the Association of Nigerian Electricity Distributors.
Revenue collection by Discos also saw improvements, with N1.23 trillion collected from a total billing of N1.548 trillion between January and September 2024, achieving a collection efficiency of 79.34%. Monthly revenues steadily increased from N95 billion in January to N171.58 billion in September, putting the Discos on track to exceed their revenue records from previous years, which included N1.1 trillion in 2023 and N828.1 billion in 2022. This upward trajectory highlights improvements in the commercial performance of electricity distribution companies.
