Nigerians may face another electricity tariff increase due to the rising subsidy shortfall, which reached N181.63 billion in September.
The Nigerian Electricity Regulatory Commission (NERC) data reveals a steady increase in the subsidy since May.
The foreign exchange crisis is the primary driver of the electricity subsidy rise. The NERC pegged the dollar exchange rate at N1,601.5 in September, impacting the cost of power production.
In April, the government removed subsidies for Band A customers, who receive at least 20 hours of electricity daily, raising their tariff to N225 per kilowatt-hour. However, the tariff dropped to N206.80/kWh in May before rising to N209/kWh in July.
The NERC stated that changes in pass-through indices, including inflation rates and the naira/dollar exchange rate, determine the cost-reflective tariffs.
Distribution companies (Discos) are complaining about non-cost-reflective tariffs, with some refusing to off-take allocated electricity. A Disco official revealed that the companies are operating at a loss due to the tariff structure.
Power Minister Adebayo Adelabu urged Discos to take more energy to prevent grid collapse, noting that generation peaked above 5,000 megawatts recently.
