The federal government, through the Nigerian Electricity Regulatory Commission, NERC, has approved a new cost-reflective tariff increase for the electricity distribution companies in Nigeria.
This is as the commission stated that the electricity subsidy will gulp N1.6 trillion in 2024.
NERC disclosed this in a Multi-Year Tariff Order for DisCos uploaded on its official website on Wednesday.
The commission said the new MYTO for DisCos takes effect from January 1 2024.
Meanwhile, the Chairman of NERC, Sanusi Garba, who explained the development to journalists in Abuja on Wednesday, said the federal government would spend 30 billion monthly, amounting to N1.6 trillion, on electricity subsidies in 2024.
The implication is that for any N150 electricity bill, the federal government will pay N90 while consumers will bear the remaining fraction.
Enugu Electricity Distribution Company, EEDC, will get N128.92bn, 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), the Eko Electricity Distribution Company (N198.78 billion) and Ikeja Electricity Distribution (N238.201 billion).
NERC stated that electricity tariff adjustments would be made monthly to avoid rate hike shock.
“If we have determined that you should be paying N150 and the Federal Government says you should pay N60, it will pay the difference.
Then that is what it is, and the government would now provide the money.
One of the new things in tariff order is, to avoid rate shock, we will now be doing the minor tariff review very frequently, like every month,’’ he said.
In the last days of 2023, a report emerged of a planned electricity hike on January 1, 2024.
However, the apex regulatory body denied the claim of electricity tariff hike.
Barely two weeks ago, the Minister of Power, Adebayo Adelabu, insisted on electricity subsidy payments at the time of review of the implementation of cost-reflective tariffs.
He said, “We’re reviewing the implementation process of a cost reflective tariffs while ensuring continued government subsidy for vulnerable members of society”.
Adelabu disclosed that the federal government spent N700 billion on electricity tariffs in 2023.
The development showed that Nigerians must battle with the new electricity pricing template amid heightened headlines and food inflation.