The Federal Government’s electricity tariff subsidy surged from ₦610 billion in 2023 to ₦1.94 trillion in 2024, marking a 219.67% increase in annual subsidy spending, even after the Band A tariff adjustment in April 2024.
This rise has been linked to the floating of the naira by President Bola Tinubu in June 2024 and the removal of fuel subsidies, both of which contributed to heightened inflation. According to the Nigerian Electricity Regulatory Commission (NERC) and various analysts, these economic shifts significantly impacted the subsidy figures.
NERC reported that the government covered a total of ₦1.94 trillion in electricity tariff subsidies in 2024 to bridge the gap between cost-reflective tariffs and the lower rates approved for consumers. However, only ₦371.34 million of this amount was paid, representing just 0.019% of the total subsidy obligation.
The 2024 report noted that due to the lack of cost-reflective tariffs across all distribution companies (DisCos), the government accumulated a subsidy obligation amounting to 62.59% of the total Nigerian Bulk Electricity Trading (NBET) invoice for the year, averaging ₦161.85 billion per month. This situation largely stemmed from the government’s decision to freeze customer tariffs, despite rising cost-reflective rates.
In comparison, NERC’s 2023 annual report indicated that DisCos’ cumulative minimum remittance obligation was 52.92%, amounting to ₦685.69 billion of ₦1.29 trillion in NBET invoices. The resulting subsidy burden for the government was ₦610.06 billion, covering 47.08% of NBET’s total invoices for that year.
