NERC: In Q2, the electricity subsidy increased to ₦135 billion

    According to the Nigerian power Regulatory Commission (NERC) report, the federal government spent a total of ₦135.23 billion for power subsidies in the second quarter of 2023.

    The amount is equivalent to a 275 percent rise from the ₦36.02 billion paid in the first quarter, according to the report acquired by Businessday.

    The Commission added that the government’s policy of harmonising exchange rates was the cause of the increase during the period and that the subsidy was caused by the lack of cost-reflective pricing for all Distribution Companies.

    “The Government agrees to provide tariff shortfall money to make up the difference (between the permitted and cost-reflective prices) in the event that cost-reflective tariffs are not implemented.

    The government’s policy of harmonising change rates is substantially responsible for the N99.21 billion (+275 percent) increase in the subsidy obligation that the government incurred in 2023/Q2 compared to the N36.02 billion spent in 2023/Q1.

    Read also>>> Cement price war rises as BUA plans to slash prices

    It said, “In 2023/Q2, the Government’s monthly subsidy obligation was ₦45.08 billion on average.”

    Seven DisCos achieved over 100% remittance performance during the period, according to the report. Ikeja (15.21%), Ibadan (112.86%), Benin (111.32%), Eko (111.20%), Enugu (108.52%), Jos (108.48%), and Yola (102.44%) are among these DisCos.

    Comparing this data to 2023/Q1, the Commission claims that the DisCos’ improved remittance to NBET can be attributed to the rise in government subsidies brought about by exchange-rate harmonisation.


    “The Commission is giving DisCos opportunities to increase revenue because it recognizes the importance of improving market remittances to sustain operations in the power industry. The SBT’s implementation and the chances it presents for DisCos to enhance customer service by supplying higher-quality energy are obvious ways to boost income without implementing widespread rate increases.

    It said, “The continuous DisCos investments in metering and infrastructure projects will lead to increased market remittances, enhanced revenue assurance, collections, and a larger volume of dependable energy supplied to customers.”

    The total amount of power produced over the time period decreased to 8,867.05 Gigawatt hours (GWh), which is equivalent to a -5.17 percent (-483.19 GWh) decrease from the 9,350.24 GWh produced in 2023/Q1.

    The decline in the power plants’ available capacity was the cause of the 2023/Q2 fall in the production of energy.
    Sixteen out of the twenty-six grid-connected power plants reported lower total generation in 2023/Q2 compared to 2023/Q1, the research claims.

    “A decline in the power plants’ available capacity was the cause of the decrease in electricity generation in 2023/Q2.”Due to gas restrictions and technical issues, Olorunsogo and Alaoji NIPP, two of the best-performing power plants in 2023/Q1, were both unavailable for 84 days (or almost 91% of the quarter) in 2023/Q2.

    Furthermore, in 2023/Q2, the average generation of all hydroelectric units decreased. The Shiroro hydroelectric plant had a reduction in output as a result of the cessation of one (1) of its four (4) units/turbines for minor maintenance and water management due to the dam’s reserves being depleted since the conclusion of the rainy season in 2022/Q3.

    In 2023/Q2, Jebba shut down half of its turbines, or around 289.2MW of capacity, so that major parts including the generator rotor, winding, and Automatic Voltage Regulator (AVR) could be completely replaced. Due to low gross operating head in April and May, Dadin Kowa was unavailable 50% of the time.

    Explore more news>>>