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 over the same time, according to data released on Sunday.
The PUNCH reported that according to the most recent data on power subsidies, which were received in Abuja from the Federal Government’s Nigerian Electricity Regulatory Commission, the government provided electricity subsidies in 2023 for the first, second, and third quarters.
Additionally, it was learned that despite widespread blackouts in Nigeria, power distribution companies collected N782.6 billion during the nine-month period, while billing energy users a total of N1.06 trillion nationally.
Regarding subsidy payments, it was noted that the Federal Government provided power subsidies of N36 billion in the first quarter of this year, N135.2 billion in the second, and N204.6 billion in the third. Since we are still in the fourth quarter of 2023, the figures for that quarter are not available.
In its recently published third-quarter 2023 report, the NERC provided an explanation for the subsidy, stating that it resulted from the lack of cost-reflective rates.
“The government undertakes to cover the resultant gap (between the cost-reflective and allowed tariff) in the form of tariff shortfall funding in the absence of cost-reflective tariffs,” it stated. The money is used to pay the bills from the Nigerian Bulk Electricity Trading Company by Discos.
According to the power regulator’s three quarterly reports, users spent N247.09 billion, N267.86 billion, and N267.61 billion in electricity bills in the first, second, and third quarters of 2023, respectively. This amounts to N782.56 billion in total.
Additionally, it was noted that consumers received electricity bills from Discos totaling N349.55 billion, N354.61 billion, and N359.38 billion during the first, second, and third quarters, respectively. For the nine months, the total bill came to N1.06 trillion.
The NERC reported in its most recent third-quarter 2023 report that “out of ₦349.55bn billed to customers, the total revenue collected by all Discos in 2023/Q3 was ₦267.61bn.”
Compared to 2023/Q2, this amounts to a collection efficiency of 76.56 per cent, an increase of +1.02 basic points.
According to the market remittance, “the cumulative upstream invoice payable by Discos was 208.7bn in 2023 Q3, consisting of 41.3bn for transmission and administrative services by the Market Operator and 167.4bn for generation costs from NBET.”
With an outstanding balance of ₦50.27 billion, the Discos collectively remitted ₦158.43 billion (₦124.53 billion for NBET and ₦33.9 billion for MO) out of this total.
This corresponds to a remittance performance of 75.91 per cent in 2023/Q3, which is lower than the 95.21 per cent achieved in 2023/Q2 by 19.30 basic points.
According to the President of the Nigerian Electricity Consumers Association, Chijioke James, it was unclear whether the government was actually providing the electricity subsidies that were being claimed.
He criticized the government’s comparisons as well, arguing that they implied Nigerians were paying less for energy than many of their peers.
“The subsidy that they claim the government is paying is unclear. The manner in which the government funds this subsidy is unclear. Everyone would be able to recognize and appreciate the government’s level of commitment if the process was open and transparent.
“If we had a transparent process, we would do a cost-benefit analysis, all the stakeholders would know how to make sure that everybody is carried along in a fair and equitable,” he said.
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