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FG Needs N3.2tn Subsidy to Reverse Electricity Tariff Hike – NERC

Electricity Tariff Hike

The Chairman of the Nigeria Electricity Regulatory Commission, Sanusi Garba, stated on Thursday in Abuja that the Federal Government of Nigeria would need to allocate N3.2 trillion in 2024 to undo the recent increase in electricity tariffs.

During a stakeholders meeting hosted by the House of Representatives Committee on Power, Garba acknowledged the progress made in sector investments but emphasized that it wasn’t sufficient to ensure a stable power supply nationwide.

He warned that without a comprehensive overhaul of the sector, including managing foreign exchange fluctuations, Nigeria’s power supply would continue to face challenges.

Garba explained that before the latest tariff review, distribution companies were only required to pay 10% of their energy invoices, which contributed to liquidity challenges within the sector. He noted that between January 2020 and January 2023, electricity tariffs increased from 55% to 94%, and the unification of foreign exchange and current inflationary pressures have pushed the cost-reflective tariff to N184/kWh.

He added, “If the decision is to maintain the status quo, the National Assembly and Executive would need to allocate approximately N3.2 trillion for subsidies in 2024.”

Garba also highlighted that only N185 billion of the N645 billion subsidy in 2023 had been provided, leaving a funding gap of N459.5 billion. Vice Chairman of NERC, Musiliu Oseni, defended the recent tariff increase, arguing that the adjustment was essential to prevent a total collapse of the sector.

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