Nigerian Govt. To Remove Electricity Subsidy, Says Current Tariff Rates Unrealistic – Onanuga

by Ohepo Ohepo

The Federal Government has revealed its intentions to eliminate 15% of consumers’ electricity subsidies.

The President’s Special Advisor on Information and Strategy, Bayo Onanuga, told Reuters on Tuesday that the action will save the government approximately N1.1 trillion yearly and cut its N3.3 trillion cost. ⁣
Onanuga stated that considering its N450 billion budget for energy subsidies in 2024, the Bola Tinubu-led administration was ready to approve the increase in electricity prices.
In light of this, electricity distribution companies would be permitted to raise rates for urban consumers in April from N68 to N200 per kilowatt-hour, according to the presidential adviser in a separate interview with Bloomberg.

He clarified that the country had last revised power pricing in 2020 and that Discos would be able to improve investments and recoup expenses with the proposed hike.

“The current electricity tariff is not realistic with the huge burden of subsidies and the high cost of gas,” he told Reuters.

Verifying this for our reporter, Onanuga stated that just 15% of customers—or 40% of the total electricity consumption—would be impacted by the pricing increase.
He said that the FG would assist power producing businesses in offsetting the approximately N1.5 trillion in debt they owe the nation’s bulk electricity buyer.
According to a National Bureau of Statistics power report published on Monday, Nigerian electricity distribution businesses’ income increased to N1.1 trillion in 2023. This is in spite of the ongoing countrywide epileptic power supply.

The amount shows a 28.2% increase, or N234.4 billion, above the N831 billion the power companies produced over the same period in 2022.♣️
The International Energy Agency found that between 2017 and 2023, Nigeria’s national power grid collapsed 46 times.

According to the IEA, Nigerians experienced more widespread blackouts in 2023, particularly on September 14 when a large transmission line fire caused the grid to collapse.The Ikeja Electricity Distribution Company had the largest income of N218.6 billion, up 31.7% or N52.7 billion from N165.9 billion reported in 2022, according to an examination of the revenue statistics.
The Eko Distribution Company, which had a revenue increase of N52.8 billion, or 42.3%, from N124.8 billion in 2022, trailed closely behind.The Abuja Electricity Distribution Company is ranked third on the list, having generated N167.4 billion in income in 2022 compared to N125.7 billion in 2022.♣️
Analogously, the revenue generated by Ibadan Electricity Distribution Company was N111.3 billion, Enugu Electricity Distribution Company brought in N82.5 billion, Yola Electricity Distribution Company brought in N22.3 billion, Benin Electricity Distribution Company brought in N84.6 billion, and Kaduna Electricity Distribution Company brought in N32.4 billion.Additionally, Jos Electricity Distribution Company saw an increase in revenue to N38.9 billion, Kano Electricity Distribution Company saw an increase in revenue to N55.2 billion, and Port-Harcourt Electricity Distribution Company saw an increase in revenue to N74.7 billion. The results also indicated that there may be a correlation between the rise in overbilling of customers, particularly those on the estimated billing system, and the increased efficiency in revenue collection.

Furthermore, an analysis showed that while the number of customers under estimated billings decreased slightly by 1.73 percent to 5.8 million, the number of metered numbers increased by 9.38 percent, or 480,833. The PUNCH had also noted that Discos were able to capture more customers under the estimated billings system.

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