According to data acquired on Sunday, the Federal Government spent N375.8 billion on electricity subsidies between January and September of this year, while power customers paid a total of N782.6 billion for the commodity during the same time.
According to the most recent power subsidy numbers acquired in Abuja from the Nigerian Electricity Regulatory Commission, a Federal Government body, the government subsidized electricity in the first, second, and third quarters of 2023.
It was also discovered that power distribution firms billed energy customers a total of N1.06tn nationally over the nine-month period, but only received N782.6bn despite widespread outages.
On subsidy payments, it was observed that in the first quarter of this year, the Federal Government subsidised power by N36bn, this increased to N135.2bn in the second quarter, and jumped to N204.6bn in the third quarter. Figures for the fourth quarter are not because we are still in the fourth quarter of 2023.
Providing reasons for the subsidy in its just-released third-quarter 2023 report, the NERC stated that it was due to the absence of cost-reflective tariffs.
It said, “In the absence of cost-reflective tariffs, the government undertakes to cover the resultant gap (between the cost-reflective and allowed tariff) in the form of tariff shortfall funding. This funding is applied to the NBET (Nigerian Bulk Electricity Trading Company) invoices that are to be paid by Discos.
“The amount to be covered by the Disco is based on the tariff that they are allowed to charge and set out as their Minimum Remittance Obligation in the periodic Tariff Orders issued by the Commission.
“It is important to note that due to the absence of cost-reflective tariffs across all Discos, the government incurred a subsidy obligation of N204.59bn in 2023/Q3 (average of N68.20bn per month), which is an increase of N69.37bn (+51.3 percent) compared to the N135.23bn (average of N45.08bn per month) incurred in 2023/Q2; this increase is largely attributable to the government’s policy to harmonise exchange rates.
“The rise in the government’s subsidy obligation meant that in 2023/Q3, Discos were only expected to cover 45 percent of the total invoice received from NBET. For ease of administration of the subsidy, the MRO is limited to NBET only with the MO (Market Operator) being allowed to recover 100 percent of its revenue requirement from the Discos.”
According to the power regulator’s three quarterly reports, customers paid N247.09 billion, N267.86 billion, and N267.61 billion in the first, second, and third quarters of 2023, respectively. This amounts to N782.56 billion.
It was also discovered that during the first, second, and third quarters, the power bills from Discos to customers were N349.55 billion, 354.61 billion, and N359.38 billion, respectively. N1.06tn was the total bill for the nine-month period.
The NERC reported in its most recent third quarter 2023 report that “the total revenue collected by all Discos in 2023/Q3 was 267.61bn out of 349.55bn billed to customers.”
“This translates to a collection efficiency of 76.56 percent, which represents an increase of +1.02 basic points when compared to 2023/Q2 (75.54 percent). The increase in collection efficiency can be attributed to the implementation of various collection campaigns for improved remittance by post-paid customers.”
On market remittance, it stated that “in 2023/Q3, the cumulative upstream invoice payable by Discos was ₦208.7bn, consisting of ₦167.4bn for generation costs from NBET and ₦41.3bn for transmission and administrative services by the Market Operator.
