FG spends ₦380bn on electricity subsidy in second quarter —NERC

FG spends ₦380bn on electricity subsidy in second quarter —NERC

The Federal Government paid a total of ₦38bn as a subsidy on electricity consumption in the second quarter of 2024, a report by the Nigerian Electricity Regulatory Commission (NERC), has revealed.

The report, covering April to June 2024, also revealed that the government assumed responsibility for 52 per cent of total generation costs, amounting to ₦380.06bn, to shield consumers from tariff increases following the freezing of end-user tariffs at December 2022 levels.

“The NBET invoice payable by the DisCos for 2024/Q2 was only ₦343.76bn because the FGN has taken responsibility for 52 per cent (₦380.06bn) of the total generation costs in the form of subsidies arising from the freezing of end-use customer tariffs at the rates that became effective in December 2022’’, the report stated.

NERC’s report stated further that the total upstream invoice payable by distribution companies (DisCos) for the quarter stood at ₦399.53bn.

According to the report, this consists of ₦343.76bn for adjusted generation costs from the Nigerian Bulk Electricity Trading Plc (NBET) and ₦55.77bn for transmission and administrative services provided by the Market Operator (MO).

However, the report noted that DisCos collectively remitted ₦318.65bn, which included ₦271.8bn for NBET and ₦46.78bn for the MO, leaving an outstanding balance of ₦80.88bn.

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This translates to a remittance performance of 79.76 per cent for Q2, a decline from the 96.93 per cent recorded in the first quarter of 2024.

The NERC report also highlighted that the revenue collected by DisCos from consumers during the period was ₦431.16bn out of a total of ₦543.64bn billed, reflecting a collection efficiency of 79.31 per cent.

This, the commission, noted marks a slight improvement from the 79.11 per cent collection efficiency recorded in the previous quarter.

Also, on the payments made by bilateral customers during Q2, NERC stated that the International customers paid $9.81 million against the $15.60m invoiced to them by the MO, while domestic bilateral customers paid ₦1.30bn out of ₦1.99bn invoiced.

“In 2024/Q2, the four (4) international bilateral customers serviced by the MO made a cumulative payment of $9.81 million against the $15.60 million invoice issued to them by the MO for services rendered in 2024/Q2.

“Similarly, the domestic bilateral customers made a cumulative payment of ₦1,295.90m against the cumulative invoice of ₦1,991.30m issued to them by the MO for services rendered in 2024/Q2.

“It is noteworthy that both local and international bilateral customers made payments during 2024/Q2 for outstanding MO invoices from previous quarters; the international bilateral customers paid $16.65m while the domestic bilateral customers paid ₦1,309.97m,” the report stated.

FG spends ₦380bn on electricity subsidy in second quarter —NERC