NERC Announces Reduction of 2024 Subsidies by N1.41 Trillion with Revised Tariffs

Towards improving Nigeria’s electricity supply and fostering investments in the Nigerian Electricity Supply Industry (NESI), the Nigerian Electricity Regulatory Commission (NERC) has announced a reduction of subsidies for the 2024 fiscal year by N1.41 trillion.

This decision is part of a broader government initiative to implement a more targeted subsidy regime aimed at mitigating the impact of changes in macroeconomic parameters while protecting vulnerable customers.

The NERC’s Vice Chairman, Mr Musliu Oseni, disclosed this development in a statement, emphasizing the commission’s commitment to creating a financially sustainable electricity market.

The commission has approved revised rates for customers classified under the Band Serv category, which represents about 15 percent of the customer population.

These customers are expected to receive a minimum average supply of 20 hours a day over a week.

The revised tariff order issued by the NERC mandates all DisCos to provide customers in the B and A service categories with a minimum average supply of 20 hours a day measured over a period of one week.

This decision is aimed at improving service delivery and ensuring that customers receive the committed level of service.

In addition to the revised tariffs, the NERC has established a robust monitoring framework to ensure that the public has visibility of the service covenant with their service providers.

An enforcement and compensation mechanism has also been set up to address any service failures.

The NERC’s decision to revise the tariffs is based on a thorough review of the tariff applications submitted by the 11 Electricity Distribution Companies (DisCos) in line with the commission’s regulations and business rules.

The review process included a public hearing, during which stakeholders and intervenors examined the rate filings submitted by the DisCos.

The overarching objective of the commission in considering the tariff applications is to create a financially sustainable electricity market that can provide adequate and reliable power supply to drive the Nigerian economy.

The NERC has also provided DisCos with mandatory targets for investments and the migration of more customers to the B service category.

The NERC’s announcement of a reduction in subsidies for the 2024 fiscal year by N1.41 trillion and the implementation of revised tariffs are part of a broader effort to improve the electricity supply in Nigeria and foster investments in the NESI.

This move is expected to have a significant impact on the Nigerian economy, as it aims to provide adequate and reliable electricity to all citizens while protecting vulnerable customers.