Electricity Subsidy may Reach N2.4tn by Year-end – NERC
The Federal Government, through its Nigerian Electricity Regulatory Commission (NERC), has declared that it would spend about N2.4tn on power subsidies before the end of this year.
NERC’s Commissioner of Planning, Research, and Strategy, Dr Yusuf Ali, disclosed this at the PwC’s Annual Power and Utilities Roundtable, themed ‘Reigniting Hope in Nigeria’s Electric Power Sector,’ in Lagos on Thursday.
Ali explained that the subsidy had fluctuated due to foreign exchange challenges and tariff adjustments.
“As of November, the subsidy amount stood at N1.9tn, but with current trends, the monthly subsidy for electricity is expected to reach N260bn in December,” Ali stated.
He emphasised that the N2.4tn is an annual estimate that could adjust depending on the monthly cost-benefit tariff.
“Every month, we calculate the difference between the cost-reflective tariff and the approved tariff to determine the subsidy,” he explained.
Ali added that the government is expected to finalise the total subsidy figure by year-end based on actual consumption and tariff trends.
The Minister of Power, Adebayo Adelabu, who was represented by the Chief Technical Adviser to the Minister, Adedayo Olowoniyi, said, the Ministry of Power, in collaboration with PricewaterhouseCoopers, has developed a draft Integrated National Electricity Policy aimed at addressing critical challenges in Nigeria’s power sector.
Adelabu emphasised the importance of implementing cost-reflective tariffs to attract necessary investments and ensure the sector’s sustainability.
“We cannot dance around the fact that a market that does not create a line of sight of return for investors will not get investment,” Adelabu noted.
The minister further acknowledged the reluctance to adopt cost-reflective tariffs but argued that it is a necessary step for achieving 24-hour electricity and universal access.
He highlighted the administration’s efforts under the Renewed Hope Agenda, including the implementation of the Electricity Act of 2023 and the Presidential Power Initiative in partnership with Siemens.
Adelabu pointed out the challenges of vandalism, ageing infrastructure, and inefficiencies in the electricity value chain, which have hampered progress.
He revealed that the Transmission Company of Nigeria spent nearly N10bn in six months repairing vandalized towers.
“Our successes have not been without challenges. Frequent grid disturbances due to capacity inadequacies and consistent vandalism have impacted the sector,” he said.
He added that these initiatives focus on infrastructure development, such as building substations and upgrading transmission and distribution networks.
“PwC’s support has been instrumental in drafting the Integrated National Electricity Policy, which will guide the sector’s strategic implementation. The policy aims to foster market discipline, improve energy delivery efficiency, and ensure subsidies benefit the most vulnerable,” Adelabu stated.
He called for collective responsibility among stakeholders, stressing, “Hope is not passive.
“We must innovate and implement bold ideas to restore confidence and deliver a sustainable energy future for all Nigerians,” Adelabu added.
