A fresh increase in electricity tariffs may be introduced by the Nigerian Government in October 2024, as the country’s monthly power subsidy surged to N181.63 billion in September, marking a significant rise from N102.30 billion in May 2024.
Data reveals that in the past three months, the government spent N163.87 billion on subsidies in July, N173.88 billion in August, and N181.63 billion in September. This steep rise comes after the Nigerian Electricity Regulatory Commission (NERC) removed subsidies for consumers connected to Band A feeders, starting April 3, 2024. At that time, the subsidy cost was pegged at N140.7 billion.
NERC subsequently approved an electricity tariff increase for consumers enjoying at least 20 hours of power supply per day, with rates rising to N225 per kilowatt-hour (kWh). This decision, however, sparked widespread outcry among Nigerians, particularly from labor unions and institutions in the education and health sectors, as their electricity bills surged following the subsidy removal.
In May, when the subsidy figure temporarily dropped to N102.30 billion, the government reduced the Band A tariff to N206.80/kWh, citing a decrease in the exchange rate of the Naira to the Dollar. However, the tariff rose again to N209/kWh in July as subsidies climbed back to N158 billion in June.
The rising subsidy expenditure is also linked to the fluctuating dollar exchange rates, which stood at N1,494.1 in July, N1,564.3 in August, and N1,601.5 in September. Additionally, the benchmark gas-to-power price has remained at $2.42 per Million British Thermal Units, as set by the Nigerian Midstream and Downstream Petroleum Regulatory Authority in accordance with the Petroleum Industry Act 2021.
With inflation standing at 32.15% in August 2024 and rising power generation costs, there are growing speculations that another electricity tariff hike may be implemented in October under the Multi-Year Tariff Order unless power generation costs decrease significantly.
