NERC: FG incurred N471bn electricity subsidy bill in Q4 2024

The Nigerian Electricity Regulatory Commission (NERC) says the federal government incurred an electricity subsidy obligation of N471.69 billion in the fourth quarter (Q4) of 2024.

In its latest quarterly report, the NERC said the electricity subsidy bill increased by N7.5 billion (1.63 percent) from N464.12 billion recorded in Q3.

The commission said in the absence of cost-reflective tariff, the government covers the resultant gap (between the cost-reflective and allowed tariff) in the form of subsidy.

“The government incurred a subsidy obligation of N471.69 billion (56.65% of total NBET invoice) in 2024/Q4,” NERC said.

“Between 2024/Q3 and 2024/Q4, the subsidy obligation of the government increased by N7.57 billion, from N464.12 billion (54.71% of the total GenCo invoice) to N471.69 billion (56.65% of the total GenCo invoice). 

“The increase in the subsidy obligation of the FGN is a result of the FGN policy to freeze allowed tariffs paid by customers despite the increase in the cost-reflective tariffs across the quarters.”

For ease of administration, the commission said the subsidy is only applied to the generation cost paid by DisCos to NBET at source in the form of a DisCo’s remittance obligation (DRO). 

‘DISCOS COLLECTED N509BN IN Q4’

The electricity regulator further said distribution companies (DisCos) collected N509.84 billion in Q4, out of the N658.4 billion billed to customers.

According to the report, this translates to a collection efficiency of 77.44 percent.

“In comparison, DisCos collected N466.69 billion in the third quarter of 2024 from the N626.02 billion billed, resulting in a 74.55 per cent collection efficiency,” the commission said.

The agency said the 77.44 percent efficiency recorded in the review quarter marked an increase of 2.89 percentage points compared to the 74.55 percent of the third quarter of the same year.

NERC said Eko DisCo recorded the highest collection efficiency at 90 percent, followed by Ikeja DisCo at 82.63 percent, maintaining their positions from Q3 last year.

“In contrast, Jos DisCo recorded the lowest collection efficiency at 49.68 percent,” the report said.

According to NERC, eight DisCos improved their collection efficiency between the third and fourth quarters of 2024, with Yola and Kano DisCos recording the most significant improvements.

The report said the remaining three distribution companies saw declines in collection efficiency, with Jos and Abuja DisCos experiencing the most significant drops over the period.