Presidency claims that the current electricity tariff is no longer feasible

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 with its N450 billion budget for energy subsidies in 2024, the Bola Tinubu-led administration was prepared 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.

As per our correspondent’s confirmation, Onanuga stated that the tariff hike would impact merely 15% of consumers, which accounts for 40% of the total electricity consumption.

Additionally, he mentioned that the FG would assist power generating companies in compensating for approximately N1.5tn of debts they owe the nation’s bulk electricity buyer.

The National Bureau of Statistics’ electricity report, which was released on Monday, revealed that the revenues of electricity distribution companies in Nigeria experienced a surge to N1.1tn in 2023. This is in spite of the ongoing countrywide epileptic power supply.

The amount is a 28.2% increase, or N234.4 billion, above the N831 billion that the electricity produced by the power 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 revenue, N218.6 billion, according to an examination of the revenue statistics. This was an increase of 31.7%, or N52.7 billion, from N165.9 billion in 2022.

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 comes in third place on the list with income creation of N167.4 billion, up from N125.7 billion in 2022.

In a similar vein, the following companies reported revenues: N111.3 billion for Ibadan Electricity Distribution Company, N82.5 billion for Enugu Electricity Distribution Company, N22.3 billion for Yola Electricity Distribution Company, N84.6 billion for Benin Electricity Distribution Company, and N32.4 billion for Kaduna Electricity Distribution Company.

Additionally, the revenue of Kano Electricity Distribution Company (N55.2 billion), Port-Harcourt Electricity Distribution Company (N74.7 billion), and Jos Electricity Distribution Company grew to N38.9 billion.

The results also indicated that there may be a correlation between the rise in overbilling of customers—particularly those enrolled in the estimated charging system—and the enhanced efficiency of revenue collection.

Additionally, The PUNCH saw that Discos were able to obtain a larger clientele with the projected billings approach.

⁣Subsequent investigation showed that although the number of consumers with underestimated billings decreased somewhat by 1.73 percent to 5.8 million, the number of metered numbers climbed by 9.38 percent, or 480,833.