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The Nigerian Electricity Regulatory Commission (NERC) has approved a new cost-reflective tariff increase for electricity distribution companies. The commission estimates that electricity subsidies will cost the federal government N1.6 trillion in 2024.
Under the new tariff structure, the federal government will pay a portion of consumers’ electricity bills, with consumers bearing the remaining fraction. For example, if a bill is N150, the government will pay N90, while the consumer pays the remaining amount.
The tariffs will take effect from January 1, 2024. NERC also stated that monthly adjustments will be made to avoid sudden rate hikes. In terms of distribution company allocations, the Enugu Electricity Distribution Company will receive N128.92 billion, the Abuja Electricity Distribution Company will receive N223.26 billion, and the Ikeja Electricity Distribution Company will receive N238.201 billion.
The announcement of the tariff increase comes after reports of a planned electricity hike at the beginning of 2024. However, the NERC denied these claims, stating that the increase is not a hike but rather a cost-reflective tariff adjustment.
The Minister of Power, Adebayo Adelabu, has emphasized the need for continued government subsidy for vulnerable members of society and stated that the federal government spent N700 billion on electricity tariffs in 2023.
This news comes amid rising inflation rates, with headline inflation at 28.92% and food inflation at 33.93% in December 2023, according to the National Bureau of Statistics.
