The Federal Government has projected that it will spend a staggering N2.4 trillion on electricity subsidies by the end of 2024.
This revelation came from the Nigerian Electricity Regulatory Commission (NERC), which disclosed the current subsidy estimates at the PwC’s Annual Power and Utilities Roundtable in Lagos on Thursday.
Dr. Yusuf Ali, NERC’s Commissioner for Planning, Research, and Strategy, confirmed that as of November 2024, the electricity subsidy stood at N1.9 trillion.
However, due to ongoing challenges, particularly fluctuations in foreign exchange rates and tariff adjustments, the monthly subsidy cost is expected to rise to N260 billion by December.
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“We calculate the difference between the cost-reflective tariff and the approved tariff every month to determine the subsidy, and this amount may adjust depending on actual consumption and tariff trends,” Dr. Ali explained.
The projected subsidy amount of N2.4 trillion is an annual estimate, subject to change based on the actual figures by year-end.
The government has indicated it will finalize the total subsidy figure after considering real-time data on consumption and tariff adjustments.
Minister of Power, Adebayo Adelabu, represented by his Chief Technical Adviser, Adedayo Olowoniyi, highlighted the government’s commitment to addressing power sector challenges.
He revealed that the Ministry of Power, in collaboration with PricewaterhouseCoopers, has drafted an Integrated National Electricity Policy aimed at tackling systemic issues within the sector.
Adelabu stressed the importance of implementing cost-reflective tariffs to attract investments and ensure the sustainability of the power sector.
“A market that does not promise returns to investors cannot expect to attract necessary investment,” he said.
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While acknowledging the reluctance to adopt cost-reflective tariffs, Adelabu argued that such measures are essential to achieving consistent power supply.
“We must confront the realities of the market to ensure 24-hour electricity and universal access,” he added.
Further, the minister addressed the persistent problems of vandalism and aging infrastructure, noting that the Transmission Company of Nigeria (TCN) spent nearly N10 billion in just six months repairing damaged power towers.
Despite these challenges, Adelabu pointed to the government’s ongoing efforts under the Renewed Hope Agenda, such as the implementation of the Electricity Act of 2023 and the Presidential Power Initiative with Siemens.
