Nigeria’s electricity subsidy drops to N380bn in Q2
Nigeria incurred N380.06 billion in electricity subsidy obligations during the second quarter of 2024, the Nigerian Electricity Regulatory Commission (NERC), in its latest report stated.
According to its quarterly report, the NERC stated that the amount represents N253.24 or 40 per cent decrease from the N633.3 billion subsidy recorded in the first quarter.
The reduction was driven by the government’s policy to review tariffs for Band A customers, while maintaining frozen rates for Band B-E customers from December 2022.
The report stated, “The government’s subsidy obligation accounted for 52.51 per cent of the total Nigerian Bulk Electricity Trading (NBET) invoice in Q2, down from 90.57 per cent in the first quarter”
To streamline administration, the subsidies cover generation costs payable by Distribution Companies (DisCos) to NBET, known as the DisCo Remittance Obligation (DRO).
The government absorbs the cost gap between allowed tariffs and actual generation costs in the absence of a cost-reflective tariff system.
This reduction signals a shift in government policy aimed at reducing its financial burden while addressing ongoing electricity pricing challenges across Nigeria.
