The Nigerian Electricity Regulatory Commission (NERC) has just announced that the Federal Government of Nigeria will spend a huge sum of N2.4 trillion on electricity subsidies before the year 2024 ends.
This announcement was made by NERC’s Commissioner of Planning, Research, and Strategy, Dr. Yusuf Ali, at PWC’s Annual Power and Utilities Roundtable meeting in Lagos on Thursday.
Dr. Yusuf Ali had more to say regarding the subsidy and its FX fluctuations in the year, which had led to increased tariffs on electricity supply to Nigerians.
He stated, “As of November, the subsidy amount stood at N1.9tn, but with current trends, the monthly subsidy for electricity is expected to reach N260bn in December. Every month, we calculate the difference between the cost-reflective tariff and the approved tariff to determine the subsidy.”
Adedayo Olowoniyi, Chief Technical Adviser to the Minister of Power, who represented the Minister of Power at the roundtable meeting, spoke about national electricity policies that will address critical challenges in Nigeria’s power sector.
He also spoke about why there’s a need to push tariffs that reflect the current economic cost of things to retain investments in the power sector. The increased tariffs are a necessary step for achieving 24-hour electricity and universal access.
Adedayo said, “We cannot dance around the fact that a market that does not create a line of sight of return for investors will not get investment.”
There are a lot of challenges, such as vandalism and outdated infrastructure and equipment, that have hindered the country’s journey to having a 24/7 power supply. TCN alone has spent N10bn in six months repairing vandalized towers.
“Our successes have not been without challenges. Frequent grid disturbances due to capacity inadequacies and consistent vandalism have impacted the sector,” Adedayo said.
He further said that they are focusing on upgrading the electricity infrastructure and improving transmission and distribution networks.
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