The Federal Government’s electricity subsidy bill has surged to an unprecedented N1.94 trillion in 2024, up from N610 billion in 2023. This represents a 219.67% year-on-year increase, even after the Band A tariff adjustment introduced in April 2024.
The Nigerian Electricity Regulatory Commission (NERC) attributed the sharp rise to key macroeconomic decisions, including the floating of the naira in June 2024 by President Bola Tinubu, as well as the removal of fuel subsidies, both of which have contributed to heightened inflation.
According to NERC’s report, the subsidy covers the difference between cost-reflective tariffs and the actual approved tariffs that customers are billed. However, the federal government has so far settled only N371.34 million of the N1.94 trillion obligation, accounting for a mere 0.019% of the amount due.
“It is important to note that due to the absence of cost-reflective tariffs across all DisCos (distribution companies) in 2024, the government incurred a subsidy obligation of N1.94 trillion, representing 62.59% of the total NBET invoice during the year,” NERC stated.
The shortfall translates to an average monthly subsidy burden of N161.85 billion, raising serious concerns about fiscal sustainability, electricity market liquidity, and the viability of the current subsidy model.
