Electricity customers on Band A feeders may face a potential tariff increase due to a rise in the electricity tariff shortfall, commonly referred to as a subsidy. Reports indicate that the electricity subsidy to be covered by the Federal Government increased to N181.63 billion in September, up from N102.30 billion in May.
When the Nigerian Electricity Regulatory Commission (NERC) announced the removal of subsidies for Band A feeders in April, the subsidy amount was N140.7 billion.
Band A customers, who receive a minimum of 20 hours of electricity daily, saw their tariffs rise to N225 per kilowatt-hour, leading to significant backlash from Nigerians, including labor unions and various institutions in education and health, as their electricity bills tripled after the subsidy removal.
In May, as the subsidy figure fell to N102.30 billion, the government reduced the Band A tariff to N206.80/kWh. However, this was increased to N209/kWh in early July when the subsidy rose again to N158 billion in June.
Data from the NERC shows that the subsidy climbed to N163.87 billion in July, N173.88 billion in August, and N181.63 billion in September, raising concerns about a potential tariff hike in the October Multi-Year Tariff Order unless the cost of power generation decreases.
The NERC also reported that the dollar exchange rates were N1,494.1 in July, N1,564.3 in August, and N1,601.5 in September. According to the regulator, fluctuations in the dollar rate and inflation are key factors influencing the cost of power production.
