The Nigerian Electricity Regulatory Commission (NERC) says the federal government paid a total of N171.25 billion as electricity subsidy in the first six months of 2023.
NERC, in its second-quarter (Q2) report dated October 17, 2023, said the subsidy was due to the absence of cost-reflective tariffs across all distribution companies.
During the first half (H1) of the year, the commission reported a total subsidy of N171.25 billion, with N36.02 billion incurred in the first quarter (Q1) and N135.23 billion in Q2.
Also Read: NIGERIAN GOVT ACCRUES N26BN FROM DRIVERS’ LICENCE IN 2022
According to the commission, the increase in Q2 can be primarily attributed to the government’s policy of harmonising exchange rates.
“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,” the report said.
“This funding is applied to the Nigerian Bulk Electricity Trading (NBET) invoices that are to be paid by DisCos.
“The amount to be covered by the DisCo is based on the allowed tariff determined by the Commission and set out as their Minimum Remittance Obligation(MRO) in the periodic Tariff Orders issued by the Commission.
“It is important to note that due to the absence of cost-reflective tariffs across all DisCos, the government incurred a subsidy obligation of N135.23 billion in 2023/Q2, which is an increase of N99.21 billion (+275%) compared to the ₦36.02 billion incurred in 2023/Q1.”
The report also highlighted that, on average, the subsidy obligation incurred by the government per month was N45.08 billion in Q2 2023.
The NERC said the government’s subsidy obligation meant that in 2023/Q2, Discos were only expected to cover 53.25 percent of the total invoice received from NBET.
Discover more from News Round The Clock
Subscribe to get the latest posts sent to your email.
