The Federal Authorities’s expenditure on electrical energy subsidies surged to ₦199.64 billion in December 2024, marking a 2.76% enhance from the ₦194.26 billion spent in November, in keeping with the Nigerian Electrical energy Regulatory Fee (NERC).Wholesale Gasoline-to-Energy Costs UnchangedContext and Broader Influence

The Federal Authorities’s expenditure on electrical energy subsidies surged to ₦199.64 billion in December 2024, marking a 2.76% enhance from the ₦194.26 billion spent in November, in keeping with the Nigerian Electrical energy Regulatory Fee (NERC).

The rise was attributed to fluctuations in key financial indicators, together with the alternate price, which NERC pegged at ₦1,687.45 to the greenback, an inflation enhance to 33.9%, and adjustments in out there energy era capability.

These elements necessitated a minor evaluate below the ‘December 2024 Multi-Yr Tariff Order’ report.

Regardless of these adjustments, NERC famous that electrical energy tariffs for all buyer classes had been retained.

Whereas Band A clients continued to pay ₦209/kWh, tariffs for patrons in Bands B to E remained frozen at charges first set in December 2022.

On account of this coverage, the Federal Authorities is predicted to spend ₦29.10 billion as subsidies for shoppers below the Abuja Electrical energy Distribution Firm (AEDC), up from ₦27.86 billion in November.

Equally, shoppers below Ikeja Electrical will obtain ₦26.68 billion in subsidies.

Wholesale Gasoline-to-Energy Costs Unchanged

NERC acknowledged that the benchmark gas-to-power worth stays unchanged at $2.42/MMBTU.

This pricing is aligned with the benchmark set by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

The fee emphasised that the accredited tariffs would keep in place however stay topic to month-to-month changes linked to key indices such because the inflation price, the NGN/USD alternate price, and gas-to-power costs.

NERC acknowledged: “The evaluate maintains the benchmark gas-to-power worth of $2.42/MMBTU based mostly on the established benchmark worth of gas-to-power by the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA.”

The Fee maintained that the “accredited tariffs shall stay in pressure topic to month-to-month adjustment of pass-through indices together with inflation price, NGN/greenback alternate price and gas-to-power costs.”

Context and Broader Influence

The rise in electrical energy subsidies follows the Federal Authorities’s elimination of petrol subsidies in Could 2023, a coverage change introduced by President Bola Tinubu.

This transfer prompted petrol pump costs to rise considerably, from round ₦189 per litre to over ₦1,000 per litre.

The rising value of subsidies and its affect on authorities funds has been a subject of debate, with many calling for reforms to cut back the fiscal burden on the federal government.