The latest power subsidy figures obtained in Abuja from the
Nigerian Electricity Regulatory Commission, an agency of the Federal
Government, showed that the government subsidised electricity in the first,
second and third quarters of 2023.
It was also gathered that power distribution companies
billed electricity users a total of N1.06tn nationwide during the nine-month
period, but collected N782.6bn despite the blackouts in many parts of Nigeria.
On subsidy payments, it was observed that in the first
quarter of this year, the Federal Government subsidised power by N36bn, this
increased to N135.2bn in the second quarter, and jumped to N204.6bn in the
third quarter. Figures for the fourth quarter are not because we are still in
the fourth quarter of 2023.
Providing reasons for the subsidy in its just-released
third-quarter 2023 report, the NERC stated that it was due to the absence of
cost-reflective tariffs.
It said, “In the absence of cost-reflective tariffs, the
government undertakes to cover the resultant gap (between the cost-reflective
and allowed tariff) in the form of tariff shortfall funding. This funding is
applied to the NBET (Nigerian Bulk Electricity Trading Company) invoices that
are to be paid by Discos.
“The amount to be covered by the Disco is based on the
tariff that they are allowed to charge and set out as their Minimum Remittance
Obligation in the periodic Tariff Orders issued by the Commission.
“It is important to note that due to the absence of
cost-reflective tariffs across all Discos, the government incurred a subsidy
obligation of N204.59bn in 2023/Q3 (average of N68.20bn per month), which is an
increase of N69.37bn (+51.3 percent) compared to the N135.23bn (average of
N45.08bn per month) incurred in 2023/Q2; this increase is largely attributable
to the government’s policy to harmonise exchange rates.
“The rise in the government’s subsidy obligation meant that
in 2023/Q3, Discos were only expected to cover 45 percent of the total invoice
received from NBET. For ease of administration of the subsidy, the MRO is
limited to NBET only with the MO (Market Operator) being allowed to recover 100
percent of its revenue requirement from the Discos.”
On the payment of electricity bills, it was observed from
the three quarterly reports of the power regulator, that consumers paid
N247.09bn, N267.86bn and N267.61bn in the first, second and third quarters of
2023 respectively. This represents a total of N782.56bn.
It was also observed that during the three quarters: first,
second and third, the electricity bills from Discos to consumers were
N349.55bn, 354.61bn and N359.38bn respectively. The total bill for the
nine-month period was N1.06tn.
In its latest third quarter 2023 report, the NERC stated
that “the total revenue collected by all Discos in 2023/Q3 was ₦267.61bn out of
₦349.55bn billed to customers.
“This translates to a collection efficiency of 76.56
percent, which represents an increase of +1.02 basic points when compared to
2023/Q2 (75.54 percent). The increase in collection efficiency can be
attributed to the implementation of various collection campaigns for improved
remittance by post-paid customers.”
On market remittance, it stated that “in 2023/Q3, the
cumulative upstream invoice payable by Discos was ₦208.7bn, consisting of
₦167.4bn for generation costs from NBET and ₦41.3bn for transmission and
administrative services by the Market Operator.
“Out of this amount, the Discos collectively remitted a
total sum of ₦158.43bn (₦124.53bn for
NBET and ₦33.9bn for MO) with an outstanding balance of ₦50.27bn.
“This translates to a remittance performance of 75.91
percent in 2023/Q3, which is down by 19.30 basic points compared to the 95.21
percent recorded in 2023/Q2.”
For remittance by special and cross-border customers in
2023/Q3, the commission stated that none of the four international customers
being supplied by Nigeria’s power generation companies in the sector made any
payment against the cumulative invoice of $11.16m issued to them by the MO for
services rendered in 2023/Q3.
“Similarly, none of the 16 bilateral customers operating in
the NESI (Nigeria Electricity Supply Industry) made any payment against the
cumulative invoice of N2,814.68m issued to them by the MO for services rendered
in 2023/Q3,” the NERC stated.
Speaking with The PUNCH, the President of the Electricity
Consumers Association of Nigeria, Chijioke James said there was no clear
indication as to whether the government was paying subsidy on electricity as
claimed.
He also faulted the comparisons made by the government which
tends to suggest the fact that Nigerians were paying less for electricity than
many of its counterparts.
He said, “The subsidy that they say the government is paying
is not clear. There is no clarity on how the government pays this subsidy. If
we had a transparent process, everybody would see the volume of commitment that
the government is making and would be able to appreciate it.
“We are more concerned about the transparent process of what
constitutes the subsidy and the tariff regime. If we had a transparent process,
we would do a cost-benefit analysis, all the stakeholders would know how to
make sure that everybody is carried along in a fair and equitable.”