FG’s electricity subsidies rise 2.76% to N199.64bn in Dec — NERC

The Federal Government's electricity subsidies increased by 2.76% to N199.64 billion as of December, according to a recent report from the Nigerian Electricity Regulatory Commission (NERC). The rise reflects ongoing efforts to cushion the financial burden on consumers while addressing the structural challenges in Nigeria's power sector. 

The subsidies are primarily aimed at bridging the gap between the cost of electricity generation and distribution and the tariffs paid by consumers. Despite periodic adjustments to electricity tariffs under the Multi-Year Tariff Order (MYTO), a significant shortfall persists, necessitating government intervention to maintain affordability and ensure service delivery. 

NERC's report highlights the impact of rising fuel costs, foreign exchange fluctuations, and inefficiencies in the power value chain as contributing factors to the subsidy growth. The shortfall underscores the financial strain faced by the government in sustaining the power sector and supporting the privatized distribution companies (DisCos). 

Critics argue that the current subsidy model is unsustainable, urging reforms to promote efficiency and investment in renewable energy sources. The government, however, maintains that the subsidies are necessary to prevent further economic strain on households and businesses already grappling with inflation and high living costs. 

The rise in subsidies has reignited debates over the long-term viability of Nigeria's electricity market, with stakeholders calling for accelerated reforms to achieve cost-reflective tariffs, improve service quality, and attract private sector investments to reduce reliance on government funding.