Nigeria: Federal Govt Pays N135bn Electricity Subsidy to Stop Tariff Hike

The federal government paid a total of N135.23 billion to subsidise electricity consumption in the second quarter of 2023, the Nigerian Electricity Regulatory Commission (NERC) has revealed.

The N135.2 billion spent by the federal government to plug revenue generation shortfall in the power sector in the second quarter of 2023 indicated an increase of N99.21 billion, representing 275 percent compared to the N36 billion it paid in the first quarter of 2023, data obtained from the NERC quarterly report indicated.

The report stated that the government incurred a subsidy obligation of N135.23 billion in 2023/Q2, which is substantially higher than the N36.02 billion it incurred in 2023/Q1.

The Commission stated that the subsidy was due to the absence of cost-reflective tariffs across all distribution companies, adding that the increase recorded in the period was a result of the government’s policy to harmonise exchange rates.

“In the absence of cost-reflective tariffs, the government undertakes to cover the resultant gap (between the cost-reflective and allowed tariff) in the form of tariff shortfall funding.

“The government incurred a subsidy obligation of N135.23 billion in 2023/Q2, which is an increase of N99.21 billion (+275 percent) compared to the N36.02 billion incurred in 2023/Q1.

“On average, the subsidy obligation incurred by the Government per month was N45.08 billion in 2023/Q2,” it stated.

The report also showed that seven DisCos recorded over 100 per cent remittance performance in the period. These DisCos include Ikeja (115.21 per cent), Ibadan (112.86 per cent), Benin (111.32 per cent), Eko (111.20 per cent), Enugu (108.52 per cent), Jos (108.48 per cent) and Yola (102.44 percent).

This indicates that the DisCos had improved remittances to NBET when compared to 2023/Q1, which according to the Commission can be explained based on the exchange-rate harmonisation-induced increase in government subsidy.

…As DisCos deploys 178,864 meters, generates N267.86bn Revenue

Meanwhile, the Distribution Companies (DisCos) have deployed 178,864 meters while generating N267.86bn revenue by the end of Q2, 2023.

According to a report released by the NERC, prepared in compliance with Section 56(3) of the Electricity Act 2023, a total of 178,864 meters were installed in 2023/Q2, representing an increase of 3,583 installations (+2.04 per cent) compared to the 175,281 meters installed in 2023/Q1.

During the period, the total revenue collected by all DisCos was N267.86 billion out of N354.61 billion billed to customers.

The report analyses the state of the Nigerian Electricity Supply Industry (NESI) covering the operational and commercial performance, regulatory functions, consumer affairs as well as the Commission’s finances and staff development.

According to NERC, the new installations resulted in a 0.85 per cent increase in net end-user metering rate in the NESI between 2023/Q1 (43.31 per cent) and 2023/Q2 (44.16 per cent).

During the quarter, 168,397 meters were installed under the Meter Asset Provider (MAP) framework while 9,302 meters were installed under the National Mass Metering Programme NMMP framework.

The vendor and DisCo financed framework recorded 1,143 and 22 meter installations respectively.

Following the perceived challenges in meter deployment, the commission charged the DisCos to utilise any of the five meter financing frameworks provided in the 2021 Meter Asset Provider and National Mass Metering Regulations to close their respective metering gaps.

As a safeguard for customers against exploitation due to the lack of meters, the commission said it had continued to issue monthly energy caps for all feeders in each DisCo.

This sets the maximum amount of energy that may be billed to an unmetered customer for the respective month based on gross energy received by the DisCo and consumption by metered customers.

Under the period in review, the total energy received by all DisCos was 7,100.87GWh while the energy billed to end-use customers was 5,789.21GWh, translating into an overall billing efficiency of 81.53 per cent.

This represents an increase of 3.56 per cent relative to the 77.97 per cent recorded in 2023/Q1. The total revenue collected by all DisCos in 2023/Q2 was N267.86 billion out of N354.61 billion billed to customers, translating to a collection efficiency of 75.54 per cent which represents an increase of 6.79 per cent when compared to 2023/Q1 (68.75 per cent).

The increase in collection efficiency was attributed to the increased metering by DisCos and the implementation of various collection campaigns for improved remittance by post-paid customers. In addition, there was improvement in the Aggregate Technical, Commercial and Collection (ATC&C) Loss.


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