The Nigeria Electricity Regulatory Commission (NERC) has said the country would pay as much as N3.2 trillion as electricity subsidy in 2024 if the recent hike in tariff is reversed.
Chairman of NERC, Sanusi Garba, stated this at the stakeholders meeting initiated by the House of Representatives Committee on Power. He explained that prior to the recent review in tariff, DISCOS were only obligated to pay 10 percent of their energy invoice.
He said the lack of cash backing for subsidy was creating a liquidity challenge in the sector. The NERC boss stated that only N185 billion of the N645 billion subsidy in 2023 has been cash backed, leaving a funding gap of N459. 5 billion.
“If sitting back and doing nothing is the way to go, it would mean that the National Assembly and the Executive would have to provide about N3.2 trillion to pay for subsidy in 2024.”
The chairman of the House Committee on Power, Victor Nwokolo, said the parley was to address issues arising from the recent increase in tariff.
He noted that NERC and DISCOs have given the committee useful Information. However, he stated that the lawmakers would still need to interface with the Transmission Company of Nigeria (TCN) and the Generation Companies (GENCOS) too.
“We will hold further consultations with them by next week. But from what they have said, which is true is that without the change in tariff, which was due in 2022, the industry lacks the capital to bring the needed change.
“Of course, with the population explosion in Nigeria, the areas being covered are beyond what they have estimated in the past and because they need to expand their own network, they also need more money.
“Every day, there are changes to the exchange rate and there are also threats to power installations because of security, thereby increasing the overhead.
“The committee has not fully agreed with them because we are not saying either yes or no because we want to get more input and also find out the possibility of gas being sold to them in naira. More of this is dependent on generation and without the gas, you cannot have power.
“The committee cannot take any decision to stop the increase in tariff. That decision can only be taken by the entire HouseHouse and not at committee level. There must be a House resolution to stop it.
“That is why we are happy that the House is not sitting next week as that will afford us an opportunity for wider consultation so that we know what you present to the entire House. We are interested in the timeline for improvement in service delivery because what Nigerians want is service delivery because light will take care of our security challenges and many other things.”
