FG To Remove Electricity Subsidy, Current Tariff Rates Unrealistic – Onanuga

The Federal Government has disclosed plans to remove electricity subsidy for 15 per cent of consumers.⁣

The move would reduce its N3.3tn cost and save the government about N1.1tn annually, the President’s Special Adviser on Information and Strategy, Bayo Onanuga, told Reuters on Tuesday. ⁣
Onanuga said the Bola Tinubu-led administration was poised to allow the price hike in electricity given its N450bn budget for energy subsidies in 2024. ⁣
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Consequently, power distribution companies will be allowed to increase prices from N68 to N200 per kilowatt-hour for urban consumers in April, the presidential aide explained in another interview with Bloomberg.
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He explained that the country last reviewed electricity tariffs in 2020, and the planned increase would enable Discos to recover costs and improve investments.⁣⁣

“With the huge subsidy burden and high cost of gas…the current electricity tariff is not realistic,” he told Reuters.
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Confirming this to our correspondent, Onanuga said the tariff hike would affect only 15 per cent of consumers, accounting for 40% of electricity consumption. ⁣
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He said the FG would help power generating companies to offset about N1.5tn debts they owe the country’s bulk electricity buyer.⁣
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An electricity report released by the National Bureau of Statistics on Monday showed that electricity distribution companies in Nigeria saw their revenues surge to N1.1tn in 2023.⁣ This is despite the persistent epileptic power supply nationwide.⁣⁣

The figure represents an increase of N234.4bn or 28.2 per cent from the N831bn generated by the power firms over a similar period in 2022.⁣
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Nigeria’s national power grid collapsed 46 times from 2017 to 2023, a report by the International Energy Agency revealed.⁣⁣

The IEA said Nigerians endured more nationwide blackouts in 2023, especially on September 14 when the grid collapsed due to a fire on a major transmission line.⁣
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An analysis of the revenue data showed that the Ikeja Electricity Distribution Company got the highest revenue of N218.6bn, up by 31.7 per cent or N52.7bn from N165.9bn recorded in 2022.⁣
It was followed closely by the Eko Distribution Company, which got a revenue increase of N52.8bn or 42.3 per cent from N124.8bn in 2022.⁣
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Third on the list is the Abuja Electricity Distribution Company, with a revenue generation of N167.4bn from N125.7bn recorded in 2022.⁣
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Similarly, Ibadan Electricity Distribution Company got a revenue of N111.3bn, Enugu Electricity Distribution Company got a revenue of N82.5bn, Yola Electricity Distribution Company (N22.3bn), and Benin Electricity Distribution Company (N84.6bn), and Kaduna Electricity Distribution Company (N32.4bn).⁣
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Also, Jos Electricity Distribution Company increased its revenue to N38.9bn, Kano Electricity Distribution Company (N55.2bn), and Port-Harcourt Electricity Distribution Company (N74.7bn).⁣
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Findings also showed that the increased efficiency in revenue collection might not be unconnected to rise in the overbilling of customers, especially those on the estimated billing system.⁣

Also, this online medium had observed that Discos were able to capture more customers under the estimated billings system.⁣
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Further analysis revealed that the number of metered numbers increased by 9.38 per cent or 480,833 while the number of customers under estimated billings reduced slightly by 1.73 per cent to 5.8m.