The Federal Government of Nigeria recorded a subsidy obligation of ₦380 billion in the second quarter (Q2) of 2024, a significant reduction from ₦633.3 billion in the first quarter, according to the latest report from the Nigerian Electricity Regulatory Commission (NERC).
The report, released on Friday, attributed the 40% drop in subsidy expenditure to tariff adjustments for Band A customers, while tariffs for Band B to E customers have remained unchanged since December 2022.
“It is important to note that due to the absence of cost-reflective tariffs across all DisCos, the Government incurred a subsidy obligation of ₦380.06 billion in Q2 2024, representing 52.51% of the total NBET invoice,” NERC stated in its report.
The commission also emphasized that the subsidy is primarily applied to cover the generation costs owed by Distribution Companies (DisCos) to the Nigerian Bulk Electricity Trading (NBET) company, ensuring stability in the electricity market.
The report further highlights the government’s ongoing challenge in bridging the gap between the actual cost of electricity production and the allowed tariff rates, underscoring the need for a sustainable solution to Nigeria’s electricity subsidy regime.
