NERC: FG spent N628bn on electricity subsidy in 2023

The Nigerian Electricity Regulatory Commission (NERC) has reported the federal government incurred a subsidy obligation of N628.6 billion in 2023.

This is contained in the NERC 2023 report published on May 22.

In the fourth quarter (Q4), the report showed that the government spent N252.76 billion – an increase of N48.17 billion or 28.54 percent compared to N204.59 billion recorded in Q3 2023.

According to NERC, the increase in subsidy was largely attributable to the government’s policy to harmonise exchange rates while also directing that end-user customer tariffs remain at the December 2022 approved rates.

In Q1 last year, the government spent N36.02 billion and N135.23 billion in the second quarter.

The subsidy is only applied to the power generation cost payable by distribution companies (DisCos ) to the Nigerian Bulk Electricity Trading (NIBET) Plc, the power trader in the sector.

‘N1TRN REVENUE GENERATION IN 2023’

In terms of revenue performance, NERC said DisCos raked in N1.07 trillion during the review period.

According to TheCable’s analysis, DisCos generated N247.09 billion in Q1, N267.86 billion in Q2  N267.61 billion in Q3, and N294.95 billion in Q4 as revenue.

“The total revenue collected by all Discos in 2023/Q4 was ₦294.95bn out of ₦399.69 billion billed to customers,” NERC said.

“This translates to a collection efficiency of 73.79 percent which represents a decrease of -2.77 basic points when compared to 2023/Q3  (76.56 percent).”

‘POWER GENERATION CAPACITY INCREASED BY 16.88% IN Q4 2023’

NERC said the available generation capacity during the quarter was 4,922.26 megawatts (MW).

This, the commission said, represents a 16.88 percent or 710.82MW increase compared to the 4,211.44MW recorded in Q3.

“The total electricity generated in the quarter also increased by 12.98% (+1,125.05GWh) from 8,664.82GWh in 2023/Q3 to 9,789.87GWh. The increase in gross energy generation during the quarter was primarily due to the increase in the available generation capacity of the grid-connected power plants compared to 2023/Q3,” NERC said.

“The significant increase in the total amount of energy generated in October compared to energy generated in September can be attributed to the increase in energy generation from Rivers IPP (+122.20%), Sapele GT NIPP (+82.82%), Afam VI (+71.01%), Shiroro (+42.97%), and Jebba (+35.40%) power plants.”

On April 3, NERC approved an increase in the electricity tariff for customers in the Band A classification—from N66 to N225 per kilowatt-hour (kwh).

The commission also said the new tariff is expected to reduce the subsidy for the 2024 fiscal year by about N1.14 trillion.