The Federal Government incurred an electricity subsidy of ₦380 billion in the second quarter of 2024.
According to the Nigerian Electricity Regulatory Commission’s quarterly report released on Friday, the electricity subsidy bill decreased by 40% to ₦253.24 billion in Q2, down from ₦633.3 billion in the first quarter.
It stated: “It is important to note that due to the absence of cost-reflective tariffs across all DisCos, the Government incurred a subsidy obligation of ₦380.06 billion (52.51% of total NBET invoice) in 2024/Q2 (average of ₦126.69 billion per month),” NERC said.
“Between 2024/Q1 and 2024/Q2, the subsidy obligation of the government reduced by – ₦253.24 billion, from ₦633.30 billion (90.57% of total GenCo invoice) to ₦380.06 billion (52.51% of total GenCo invoice).
“The significant decrease in the subsidy obligation of the FGN is a result of the policy directive of the Government to implement reviews of tariffs charged to Band A customers while the tariffs for Band B-E customers remain frozen at the rates payable since December 2022.”
The commission explained that for administrative simplicity, the subsidy is applied directly to the generation cost owed by Distribution Companies (DisCos) to the Nigerian Bulk Electricity Trading (NBET) through a DisCo’s Remittance Obligation (DRO).
It also highlighted that, in the absence of a cost-reflective tariff, the government bridges the gap between the cost-reflective tariff and the approved tariff by providing subsidies.