Electricity tariff hike looms as subsidy costs rises

Electricity customers on Band A feeders may face a potential tariff increase as the Federal Government’s subsidy on electricity, also known as the tariff shortfall, continues to rise.

The subsidy increased to ₦181.63 billion in September, up from ₦102.30 billion in May.

This comes after the Nigerian Electricity Regulatory Commission (NERC) removed subsidies for Band A areas, where customers enjoy a minimum of 20 hours of electricity daily.

Following the removal, tariffs rose to ₦225 per kilowatt-hour, sparking widespread public outcry.

Despite lowering the Band A tariff to ₦206.80/kWh in May, the ongoing rise in subsidy costs driven by factors like foreign exchange challenges and inflation has led to speculation of another tariff hike under the Multi-Year Tariff Order (MYTO).

As the cost of power generation continues to climb, distribution companies (Discos) are pressing for the removal of subsidies across all customer bands.

The Minister of Power, Adebayo Adelabu, has expressed concern over the rejection of electricity by Discos due to non-cost-reflective tariffs, urging them to take more energy to prevent grid collapse.

This situation raises concerns about further tariff adjustments as the government struggles to balance power generation costs and economic hardship.