Despite the publication of the multi-year tariff order for 2024, the Nigerian Electricity Regulatory Commission (NERC) on Wednesday said the eleven electricity distribution companies (DISCos) have been asked not to proceed with the implementation of the new electricity tariff regime.
The Chairman of NERC, Sanusi Garba, in a briefing in Abuja, said not going ahead with the implementation of the new tariff regime would cost the Federal Government an average of N120 billion every month and about N1.6 trillion as subsidies for consumers in 2024.
With the decision to stop the implementation of the new tariff regime, Garba said the electricity tariff that has been in place since December 2022 would remain in place till further notice.
A review of the MYTO 2024 published on the NERC website on Wednesday showed that the government would pay about N19.44 billion every month, or a total of N233.26 billion as subsidies during the year for consumers under the Abuja Electricity Distribution Company (AEDC) operational franchise.
NERC Chairman confirmed that although the AEDC management had requested for approval for the hike in its tariff to about N151.07 as cost reflective tariff per kilowatt hour, only N120.88/kWh was approved.
With the tariff freeze, Garba said electricity consumers would be charged only N63.24/kWh, while the government would absorb N58.12/kWh.
Also, the government would pay N19.85 billion every month, or N238.20 billion as subsidies for the year for electricity consumers within Ikeja Electric in 2024.
While Ikeja DISCO management requested N128.18/kWh as cost reflective tariff, the Commission said, with approved N112.10/kWh, with consumers to be charged only N56.60/kWh, while the government would take up N55.50/kWh as a subsidy under the tariff freeze regime.
For consumers in Enugu DISCo’s franchise area, NERC said the government would pay N10.74 billion monthly or N129.92 billion as subsidies in 2024.
Although the EEDC management requested N155/kWh as cost reflective tariff, NERC said it approved only N128/kWh, with consumers to be charged N59/kWh, leaving the government to pay N69.40/kWh as a subsidy.
The Commission said consumers within the Benin DISCo franchise area would enjoy about N11.74 billion in electricity subsidy every month, or a cumulative subsidy of N140.85 billion for the year.
NERC said the utility had requested an astronomical N277.70/kWh as cost reflective tariff hike, but after consideration of some factors, only N126/kWh was approved, translating to about N60.10/kWh to be paid by the consumers, while the government would bear the cost of N65.90/kWh as subsidy.
For Eko DISCO, NERC said out of about N116.4 per kilowatt hour its management requested, about N114.80 per kWh was approved, with consumers to pay N59.50 per kWh against about N55.30 per kWh to be subsidized by the Federal Government.
The average monthly subsidy payable by the DISCO is about N16.56 billion, or about N198.77 billion for the year.
For Ibadan DISCO, NERC said a request for N156.35 per kWh was made as a cost-reflective tariff for the year, but N126.10 per kWh was approved, out of which consumers in the franchise area would pay N62.50 per kWh, while the Federal Government would subsidize with about N63.60 per kWh. The subsidies would translate to N16.65 billion every month, or N199.84 billion for 2024.
Out of a request for N152.44 per kWh made as a cost-reflective tariff for the year, NERC said N138.90 per kWh was approved for Jos DISCO, out of which consumers in the franchise area would pay N60.60 per kWh, allowing the Federal Government to subsidize with about N78.30 per kWh. The subsidies would translate to N8.65 billion every month, or N103.78 billion for 2024.
Similarly, Kaduna DISCO which requested N189.42 per kWh as a cost-reflective tariff for the year, NERC said N121.88 per kWh was approved, out of which consumers in the franchise area would pay N57.50 per kWh, allowing the Federal Government to subsidize with about N64.38 per kWh. The subsidies would translate to N10.16 billion every month, or N121.88 billion for 2024.
For Kano DISCO, a request for N204.91 per kWh was made as a cost-reflective tariff for the year, but NERC said N128.20 per kWh was approved, out of which consumers in the franchise area would pay N58.80 per kWh, allowing the Federal Government to subsidize with about N69.40 per kWh. The subsidies would translate to N10.18 billion every month, or N122.19 billion for 2024.
NERC said Port Harcourt DISCO submitted a request for N157.88 per kWh as a cost-reflective tariff for the year, but N127.00 per kWh was approved, out of which consumers in the franchise area would pay N61.40 per kWh, while the Federal Government would subsidize with about N65.60 per kWh. The subsidies would translate to N10.16 billion every month, or N121.95 billion for 2024.
Yola DISCO, NERC said, requested N219.56 per kWh a cost-reflective tariff for the year, but N214.10 per kWh was approved, out of which consumers in the franchise area would pay N66.00 per kWh, while the Federal Government would subsidize with about N148.10 per kWh. The subsidies would translate to N5.37 billion every month, or N64.48 billion for 2024.
During the briefing, the NERC Chairman explained why the Federal Government decided to pay the subsidy.
“For the first time, we have published the amount each DISCO is allowed to charge based on government policy to continue to pay subsidies. A review of the MYTO will show that tariffs are not going up, but what the DisCos should have been charging and the subsidies the government will be paying to cover the gap”, he added.