Electricity customers on Band A feeders may soon face another tariff hike as the electricity tariff shortfall, also known as subsidy, has skyrocketed to N181.63 billion in September.
This development has sparked fears of an imminent tariff increase, as the Nigerian Electricity Regulatory Commission (NERC) had previously raised the tariff to N225 per kilowatt-hour for Band A customers.
The NERC had reduced the tariff to N206.80/kWh in May when the subsidy figure dropped to N102.30 billion but increased it again to N209/kWh in July.
According to industry sources, the foreign exchange crisis has been the major driver of the electricity subsidy, with the dollar exchange rate and inflation being the determinants of the cost of power production.
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“The rise in subsidy is a clear indication that another tariff hike is looming,” said a top official of one of the distribution companies, who pleaded anonymity.
The Minister of Power, Adebayo Adelabu, recently decried the rejection of power by electricity distribution companies, describing it as regrettable.
“This is really regrettable considering that the government is on course to increase generation to 6,000MW by the end of the year,” Adelabu said.
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The NERC has maintained that the benchmark gas-to-power price of $2.42/MMBTU is based on the established benchmark price of gas-to-power by the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
As the subsidy continues to soar, electricity customers on Band A feeders are bracing themselves for another tariff hike, which may further increase their electricity bills.
