Govt Subsidy Delays New Electricity Tariff Implementation

Govt Subsidy Delays New Electricity Tariff Implementation
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The Federal Government has directed eleven electricity distribution companies (DisCos) not to implement the new electricity tariff for consumption, despite the release of a new tariff regime by the Nigerian Electricity Regulatory Commission (NERC) on Wednesday.

The decision to delay the implementation of the new tariff is attributed to the Federal Government’s commitment to pay N1.6 trillion in subsidies for consumers in 2024, averaging a monthly subsidy of N120 billion.

NERC Chairman, Engr. Sanusi Garba explained the government’s stance during a press briefing in Abuja. He clarified that although the new Multi-Year Tariff Order 2024 had approved increases in rates, consumers would not be paying higher prices for electricity due to the government’s subsidy.

Under the new policy, the federal government is expected to pay N233.26 billion (or N19.44 billion monthly) as subsidies for consumers under the Abuja Electricity Distribution Company (AEDC) franchise. Despite AEDC applying for N151.07 as a cost-reflective tariff per kilowatt-hour, NERC approved N120.88/kWh. With the tariff freeze, consumers will be charged only N63.24/kWh, while the government covers the remaining N58.12/kWh.

Govt Subsidy Delays New Electricity Tariff Implementation
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    Similarly, consumers served by Ikeja Electric will benefit from a federal government subsidy of N238.20 billion (or N19.85 billion monthly) in 2024. This results in consumers being charged only N56.60/kWh, compared to the approved cost-reflective tariff of N128.18/kWh.

    Enugu Electricity Distribution Company (EEDC) consumers will see a subsidy of N129.92 billion (or N10.74 billion monthly) in 2024. Despite EEDC applying for N155/kWh as a cost-reflective tariff, NERC approved N128/kWh. With the tariff freeze, consumers will pay only N59/kWh, while the government subsidizes the remaining N69.40/kWh.

    For Benin Electricity Distribution Company, consumers are set to enjoy a cumulative subsidy of N140.85 billion (or N11.74 billion monthly). The utility had applied for an N277.70/kWh cost-reflective tariff but received approval for N126/kWh. Consequently, consumers will pay N60.10/kWh, with the government covering N65.90/kWh as a subsidy.

    Read Also: Electricity Workers Union Appreciates National Assembly Over the Suspension of The Proposed Increase in Electricity Tariff

    This directive provides relief to electricity consumers, ensuring that the anticipated tariff hikes are temporarily put on hold as the federal government steps in to support affordability and accessibility.

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