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Federal Government to Pay N1.6 Trillion for Electricity Subsidy in 2024

Federal Government to Pay N1.6 Trillion for Electricity Subsidy in 2024

The Nigerian Electricity Regulatory Commission (NERC) has revealed that the federal government plans to allocate N1.6 trillion for electricity subsidy in 2024. This announcement was made during a press briefing in Abuja by Engr. Sanusi Garba, the Chairman of NERC.

Garba cited the impact of inflation and forex unification as key factors contributing to the government’s decision to subsidize electricity. He anticipates that the government will disburse N120 billion monthly for this purpose, marking an increase of over N500 billion compared to the subsidy paid in 2023.

It’s worth noting that the Minister of Power, Adebayo Adelabu, disclosed that N700 billion was paid as subsidy last year, surpassing the N150 billion paid annually in 2022 and 2021 when the Multi-Year Tariff Order (MYTO) was issued by NERC. Despite the MYTO allowing tariff reviews twice a year, the government has not introduced new tariff prices, covering the shortfalls customers pay to the market.

Garba explained that the challenging economic situation led to the government’s decision to continue subsidizing electricity. In a new order, NERC aims to make public the tariff allowed for DisCos (Distribution Companies) and the corresponding subsidy provided by the government.

He clarified that while tariffs won’t see a direct increase, the order ensures transparency by revealing what DisCos charge and the government’s subsidy amount. Additionally, the commission plans monthly reviews to enable DisCos to charge market-reflective tariffs without causing significant rate shocks. These reviews will consider factors like inflation rates and other economic indicators.

Garba emphasized that the government is implementing measures to facilitate DisCos’ access to long-term funds for providing meters to customers. This move aims to enhance efficiency and accountability in the distribution of electricity.

The Federal Government’s decision to allocate N1.6 trillion for electricity subsidy in 2024 reflects ongoing efforts to address economic challenges and ensure transparency in the electricity sector. The subsidy will help stabilize tariffs, and monthly reviews are introduced to align with market dynamics.

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