As power subsidies reach 2.8 trillion, the FG and DisCos may agree on a pricing increase

Following the request by power distribution firms (DisCos) to review electricity pricing, the FG and DisCos may shortly reach an agreement.According to a recent report by the Nigerian Electricity Regulatory Commission (NERC), titled 'Overview of the Nigeria Electricity Supply Industry.'The FG benefited from DisCos' decision to raise energy pricing because it saved an additional 1 trillion in subsidy payments to power companies. The NERC analysis also stated that the Federal Government paid 2.8 trillion in subsidies (tariff shortfalls) between 2015 and 2022, while the amount spent on energy subsidies between January and April 2023 was 57 billion.“Without the tariff reviews that commenced in 2019, subsidies payable by the government would have grown to about ₦1trillon per annum by 2023. Service-Based Tariff was instrumental in the transition to cost-reflective levels.” the report added. The rate increment which was earlier scheduled to take effect from July 1, 2023, after 11 DisCos filed an application for rate review with NERC was put on hold as NERC refused to give the nod. An increase in electricity tariff would see Nigerians pay about 30 to 40% more for selected categories of consumers.