Electricity Subsidy Surges to N628.61bn in 2023, Discos Earn N1.08tn

Amidst ongoing debates regarding Nigeria’s power sector and the financial dynamics surrounding it, the latest data from the Nigerian Electricity Regulatory Commission (NERC) has revealed significant figures concerning electricity subsidy and the earnings of power distribution companies (Discos).

According to the data obtained from NERC, the Federal Government’s expenditure on electricity subsidy soared to a staggering N628.61 billion in 2023.

This substantial subsidy expenditure indicates the government’s continued financial support to ensure electricity affordability for consumers across the nation.

Simultaneously, power distribution companies amassed a total revenue of N1.08 trillion during the same period.

This substantial revenue underscores the financial capacity of the Discos despite ongoing challenges within the power sector, including issues related to infrastructure, metering, and service delivery.

Analysis of the figures provided by NERC reveals a consistent increase in electricity subsidies throughout 2023.

In the first, second, third, and fourth quarters of the year, subsidies on power amounted to N36.02 billion, N135.23 billion, N204.6 billion, and N252.76 billion, respectively.

This steady rise in subsidy expenditure reflects the government’s commitment to bridging the gap between the cost-reflective tariff and the allowed tariff.

Conversely, power distribution companies witnessed notable revenue growth over the same period.

Despite concerns raised by consumers regarding service quality and reliability, Discos reported earnings of N247.09 billion, N267.86 billion, N267.61 billion, and N294.95 billion in the first, second, third, and fourth quarters of 2023, respectively.

This substantial revenue generation highlights the financial viability of the Discos within the current regulatory framework.

The surge in revenue by Discos has prompted calls from various stakeholders for improved service delivery and accountability within the power sector.

Consumers have expressed dissatisfaction with the quality of service provided by Discos, emphasizing the need for enhanced operational efficiency and infrastructure investment to address prevailing challenges.

In the absence of cost-reflective tariffs, the Federal Government continues to bear the burden of electricity subsidies to ensure affordability for consumers.

These subsidies primarily target power generation costs payable by Discos to the Nigerian Bulk Electricity Trading company, thereby supporting electricity generation and supply across the country.

Commenting on the subsidy expenditure for the fourth quarter of 2023, NERC highlighted the government’s policy to harmonize exchange rates and maintain end-user customer tariffs at approved rates.

This policy direction contributed to the increase in subsidy obligations, reflecting the government’s efforts to stabilize electricity prices amidst economic uncertainties.