Nigeria incurred N380.06 billion in electricity subsidy obligations during the second quarter of 2024, according to the latest report by the Nigerian Electricity Regulatory Commission (NERC).
This reflects a 40% reduction from the N633.3 billion subsidy recorded in the first quarter.
The NERC report highlighted that the reduction, amounting to N253.24 billion, was driven by the government’s policy to review tariffs for Band A customers, while maintaining frozen rates for Band B-E customers since December 2022.
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The report stated, “The government’s subsidy obligation accounted for 52.51% of the total Nigerian Bulk Electricity Trading (NBET) invoice in Q2, down from 90.57% in Q1.”
To streamline administration, the subsidies cover generation costs payable by Distribution Companies (DisCos) to NBET, known as the DisCo Remittance Obligation (DRO).
The government absorbs the cost gap between allowed tariffs and actual generation costs in the absence of a cost-reflective tariff system.
This reduction signals a shift in government policy aimed at reducing its financial burden while addressing ongoing electricity pricing challenges across Nigeria.
(Edited by Oludare Mayowa; omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)
