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

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• 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.

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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.

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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.