RipplesMetrics: Nigeria paid N1.5bn daily on electricity subsidy in nine months

Data gathered from the Nigerian Electricity Regulatory Commission has shown that between January and September 2023, the Nigerian government paid N375.84 billion as electricity subsidy,

RipplesMetics analyses from the quarterly report of the commission showed that at least an average of N41.76 billion was spent within the nine months. If the amount is broken down into days, the federal government would be paying N1.5 billion daily within the months under review.

According to the NERC report, in the absence of cost-reflective tariffs, the government undertakes to cover the resultant gap (between the cost-reflective and allowed tariff) in the form of tariff shortfall funding.

This funding is applied to the NBET invoices that are to be paid by distribution companies (DisCos). The amount to be covered by the DisCo is based on the tariff that they are allowed to charge and set out as their Minimum Remittance Obligation (MRO) in the periodic Tariff Orders issued by the Commission.

READ ALSO:Nigeria signs agreement with Germany to improve electricity supply

The data showed that N36.02 billion was paid by the federal government between January and March 2023. In the second quarter of the year, N135.23 billion was paid while N204.59 billion was paid in the third quarter.

Ripples Nigeria has reported how the incumbent president, Bola Tinubu, said his administration is committed to seeing that Nigerians enjoy 24 hours of electricity. This is connected to the administration’s plans to generate 20,000 megawatts by 2060.

Recall that in the power sector, there were multiple reported gird collapses in the year. A report by Ripples Nigeria documents how two grid collapses happened within five days dropping the power generation to 42.7MW.

Revenue generated in nine months

RipplesMetrics further checked through the revenue collected by NERC within the nine months which totalled N782.56 billion.

According to the data, N247.09 billion was collected between January and March 2023. In the second quarter of the year, N267.86 billion was paid while N267.61 billion was paid in the third quarter.

By this, NERC collected 68.75 per cent of its revenue from customers connected to the 11 DisCos. The collection efficiency increased to 75.54 per cent in the second quarter and 76.56 per cent in the third quarter of 2023.

NERC said, “The overall increase in collection efficiency in 2023/Q3 could be attributed to the implementation of various collection campaigns by DisCos to improve remittance from post-paid customers.”

Recall that the federal government also recently partnered with Geremy to improve electricity distribution within the country. Also in June, Nigeria secured $750 million to boost its power sector.

By James Odunayo

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