Possible Tariff Hike Looms for Band A Electricity Customers Amid Rising Subsidy Shortfall

By Newsroom

Administrator

Newsroom

Posted: September 23, 2024 at 8:39 am, Updated: September 23, 2024 at 8:39 am

Key Points

Band A electricity customers, who receive at least 20 hours of power daily, may face another tariff hike as the Federal Government’s electricity subsidy shortfall rises to N181.63 billion in September.
The Nigerian Electricity Regulatory Commission (NERC) had previously increased tariffs for Band A customers to N225/kWh in April, reducing it to N206.80/kWh by May due to subsidy adjustments.
With the subsidy shortfall continuing to grow, there is concern that further tariff hikes are likely as the government seeks to balance financial pressures in the power sector.

Possible Tariff Hike Looms for Band A Electricity Customers Amid Rising Subsidy Shortfall

Electricity customers on Band A feeders may soon face another tariff increase due to a growing electricity tariff shortfall, commonly known as a subsidy.

According to The PUNCH, the Federal Government’s electricity subsidy surged to N181.63 billion in September, a sharp increase from N102.30 billion in May 2024.

In April, the Nigerian Electricity Regulatory Commission (NERC) removed the subsidy for areas categorized under Band A feeders.

These customers, who receive a minimum of 20 hours of electricity daily, saw their tariff jump to N225 per kilowatt-hour (kWh), causing public outcry, especially from labor unions, educational, and health institutions, whose electricity costs tripled.

By May, the subsidy decreased to N102.30 billion, prompting a tariff reduction to N206.80/kWh for Band A customers.

However, as the subsidy rose again to N158 billion in June, the tariff was adjusted to N209/kWh in early July.

As the subsidy shortfall continues to rise, there is growing concern that customers on Band A feeders may soon face further tariff increases, reflecting the government’s efforts to manage liquidity in the power sector while reducing the financial burden of subsidies.