In a recent meeting with the House of Representatives Committee on Power in Abuja, the Nigerian Electricity Regulatory Commission (NERC) stated that the federal government would need to provide N3.2 trillion in subsidies by 2024 to offset the impact of the recent electricity tariff increase.
The announcement of a nearly 245% electricity tariff hike for Band A customers on April 3, 2024, was met with criticism from various sectors, including Nigerians, private organizations, labor unions, and other groups.
NERC Chairman Sanusi Garba defended the tariff hike, emphasizing the necessity to attract investments and enhance power supply in the country. He highlighted the challenges posed by the lack of sectoral overhaul and currency fluctuations on power supply in Nigeria.
Prior to the tariff review, distribution companies were only required to pay 10% of their energy invoice, leading to liquidity issues in the sector. Garba pointed out that factors such as FX unification and inflation pressures have pushed the tariff to N184 per kilowatt-hour.
If no action is taken, Garba warned that the government would have to allocate N3.2 trillion for subsidies in 2024, as only a fraction of the previous year’s subsidy had been funded.
Chairman of the Committee, Victor Nwokolo, emphasized the necessity of the tariff increase for capital investment in infrastructure and expansion to keep up with the growing population and demand for electricity.
Amidst the tariff hike, power outages have become more frequent across the country, further exacerbating the challenges faced by Nigerian consumers.