NERC: reversing electricity hike will gulp N3.2tn in subsidy

The Nigeria Electricity Regulatory Commission (NERC) has said the federal government must pay N3.2 trillion as a subsidy for the electricity sector in 2024 if the electricity tariff hike is to be reversed. NERC chairman, Sanusi Garba this at a stakeholders’ meeting convened by the House of Representatives Committee on Power at the National Assembly Complex in Abuja on Thursday. Garba said current investments in the power sector, were not enough to guarantee a steady power supply if nothing concrete is done to address grim challenges. He said before the recent review in tariff Distribution Companies (DisCos) were only obliged to pay 10 per cent of their energy invoice, adding that the lack of cash backing for subsidy creates a liquidity challenge in the sector. The chairman also said that due to the non-payment of subsidies, gas supply and power generation have continued to dip, adding that the continuous decline of generation and system collapse are largely linked to liquidity challenges. Garba raised an alarm about what he called a looking risk of not being shut down by the Generation and distribution companies, achieving cost-effective tariffs is key to the sustainability of the sector. According to Garba, only N185 billion of the N645 billion subsidy in 2023 has been cash-backed, leaving a funding gap of N459. 5 billion. In his intervention, the Chairman, of the House Committee on Power, Victor Nwokolo said the meeting was aimed at addressing the recent increase in tariff and the issue of band A and others.