The Federal Government’s electricity subsidy has surged by 269%, increasing from ₦650 billion in 2023 to an estimated ₦2.4 trillion in 2024.
This rise comes despite the implementation of the Band A tariff service category in April, which was intended to reduce subsidy obligations by ₦1.14 trillion.
Dr. Yusuf Ali, Commissioner for Planning, Research, and Strategy at the Nigerian Electricity Regulatory Commission (NERC), disclosed this during his presentation at PwC’s Annual Power and Utilities Roundtable in Lagos on Friday.
Discussing “Reigniting Hope in Nigeria’s Electric Power Sector,” Dr. Ali attributed the steep subsidy increase to macroeconomic shocks, particularly foreign exchange instability, which drove cost-reflective tariffs up by 118% between 2023 and 2024.
“The best estimate for 2024 is that the cumulative subsidy will be ₦2.4 trillion,” Dr. Ali said.
He further explained that while tariff increases in April 2024 were meant to reduce subsidies, the tough macroeconomic conditions have hindered tariff payments.
“Without the tariff reforms between 2020 and 2023, subsidies would have risen even more, especially due to recent economic shocks,” he added.
Minister of Power, Chief Adebayo Adelabu, represented by his Chief Technical Assistant, Adedayo Olowoniyi, stressed the government’s commitment to tackling power sector challenges. He noted that under President Bola Ahmed Tinubu, energy is seen as crucial for economic growth and job creation.
“To ensure the sector’s sustainability, the government has implemented a comprehensive approach, including the Electricity Act 2023, an Integrated National Electricity Policy, and infrastructure programs to speed up expansion,” Olowoniyi said.
He also highlighted strategies such as leveraging bilateral funding, commercializing the sector, and collaborating with development partners to tackle challenges in the Nigerian Electricity Supply Industry.
“We’ve faced frequent grid disturbances due to aging infrastructure, resource constraints, and vandalism of transmission networks,” he noted.
In response, the government has initiated short-term measures like enhancing maintenance plans for key substations, replacing outdated equipment, and conducting data-driven analysis to prevent disruptions.
“For long-term solutions, we are finalizing plans for a super grid to create a more resilient system,” the minister added. He concluded by emphasizing the need for innovation and collaboration to restore confidence in the sector, ensuring that every Nigerian has access to reliable and affordable electricity.
