NERC says new electricity tariff will cut 2024 subsidies by N1.14trn

Business a.m.

The Nigerian Electricity Regulatory Commission (NERC) has announced that the newly approved electricity tariffs for 2024, particularly the 245 per cent increase in tariffs for Band A customers, are expected to result in a reduction of subsidies by approximately N1.14 trillion.

Musliu Oseni, the vice chairman of the NERC, who announced the increase in electricity tariffs in a statement issued in Abuja, stated that the new tariffs are in line with the federal government’s intention to transition to a targeted subsidy regime, which aims to mitigate the effects of macroeconomic changes on the electricity sector.

Oseni stated: ” With the newly approved tariffs, subsidies for the 2024 fiscal year are expected to reduce by about NGN1.14 trillion in furtherance of the Federal Government’s realignment of the subsidy regime.  

” While largely protecting vulnerable customers and fostering investments targeted at providing efficient service delivery in the Nigerian Electricity Supply Industry (NESI).  

” The overarching objective of the commission in the consideration of the tariff application is the creation of a financially sustainable electricity market providing adequate and reliable power supply to drive the Nigerian economy. 

” The commission, upon due consideration of the tariff applications, has approved revised rates affecting only customers classified under Band Serv category which is about 15 per cent of the customer population.” 

The NERC also stated that it has developed a robust monitoring framework that leverages technology to ensure that the public has full visibility of the service standards set for DisCos. The framework includes an enforcement and compensation mechanism for customers in the event of service failures. 

“We wish to assure all Nigerians that the commission working in collaboration with the policymakers remains committed to providing adequate and reliable electricity to all citizens as we work diligently with state governments to deliver on the gains of the Electricity Act 2023,” the commission stated.

According to the NERC, the new tariffs come with an obligation for distribution companies (DisCos) to provide customers classified under Band A with a minimum average supply of 20 hours per day, measured over a one-week period. 

NERC further clarified that the increase in tariffs applies only to Band A customers and will not affect customers in the Band B to E service categories, which account for 85 per cent of the total customer population. The commission added that it has given all DisCos mandatory targets for investments and migration of more customers to Band A.