The Chairman of the Nigeria Electricity Regulatory Commission (NERC), Mr Sanusi Garba says the Nigerian government requires a whopping N3.2 trillion as subsidy for the electricity sector in 2024 if the recent increase in tariff is to be reversed.
He made the revelation at a stakeholders meeting organized by the House of Representatives Committee on Power.
He said that current investments in the sector was not enough to guarantee steady power supply.
Mr. Garba also noted that if nothing concrete is done to address issues in the sector including foreign exchange fluctuation and none payment for gas, the sector will be heading for doom.
He explained that prior to the recent review in tariff, DisCos were only obligated to pay 10 percent of their energy invoice.
He also stated that the lack of cash backing for subsidy is creating a liquidity challenge in the sector.
He said further that as a result of the none payment of subsidy, gas supply and power generation have continued to dip, adding that the continuous decline of generation and system collapse are largely linked to liquidity challenge.
The chairman further explained that between January 2020 and January 2023, tariff increased from 55 percent of cost to 94 percent lt cost recovery, saying that “the unification of FX and current inflation pressures are pushing cost reflective tariff to N184/kwh
“if seating back and doing nothing is the way to go, it would mean that the National Assembly and the Executive would have to provide about N3.2 trillion to pay for subsidy in 2024.” Mr Garba said.
He also stressed that only N185 billion of the N645 billion subsidy in 2023 has been cash backed, leaving a funding gap of N459. 5 billion.
Similarly, the Vice Chairman of NERC, Mr Musiliu Oseni who also justified the recent increase in tariff said that the increment was needed to save the sector from total shutdown.
