The Nigerian Electricity Regulatory Commission (NERC) has given its nod for a new cost-reflective tariff increase for electricity distribution companies (DisCos) across the country.
This comes as the commission revealed that the electricity subsidy is projected to amount to N1.6 trillion in 2024.
The details of the new Multi-Year Tariff Order (MYTO) for DisCos were made public on the official website of NERC on Wednesday.
According to the commission, the updated MYTO for DisCos will become effective from January 1, 2024.
In a press briefing held in Abuja on Wednesday, the Chairman of NERC, Sanusi Garba, clarified that the federal government is expected to allocate a monthly sum of 30 billion, totaling N1.6 trillion, for electricity subsidies in 2024.
This means that for every N150 electricity bill, the government will cover N90, with consumers responsible for the remainder.
Under the new tariff structure, various electricity distribution companies are set to receive substantial sums, including the Enugu Electricity Distribution Company (N128.92 billion), Abuja Electricity Distribution Company (N223.26 billion), Yola Electricity Distribution Company (N64.48 billion), Benin Electricity Distribution Company (N140.85 billion), Ibadan Electricity Distribution Company (N199.841 billion), Eko Electricity Distribution Company (N198.78 billion), and Ikeja Electricity Distribution (N238.201 billion).
NERC has emphasized that adjustments to electricity tariffs will be made on a monthly basis to mitigate any sudden rate hikes.
Sanusi Garba explained, “One of the new things in the tariff order is, to avoid rate shock, we will now be doing the minor tariff review very frequently, like every month.”
This decision comes after initial reports suggested an impending electricity tariff hike on January 1, 2024, which was later refuted by NERC.
Minister of Power, Adebayo Adelabu, reiterated the government’s commitment to subsidizing electricity costs for vulnerable members of society, revealing that N700 billion was allocated for this purpose in 2023.
Despite these efforts, Nigerians are likely to face the challenges posed by the new electricity pricing template, especially in light of the recent increase in headline and food inflation rates to 28.92 percent and 33.93 percent, respectively, as reported by the National Bureau of Statistics in December 2023.
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