FG to offset electricity subsidy arrears by December 2022

Solomon Ezeme

The measure to fully implement a cost reflective electricity market regime has again been reaffirmed by the Nigerian Electricity Regulatory Commission (NERC), as the Commission has promised that the Federal Government will fully pay off all outstanding shortfalls on tariff subsidy by December 2022, amounting to a staggering sum of N247billion.

Engr Belije Madu, a senior Secretariat official of the Power Sector Recovery Programme (PSRP), an arm of NERC, made this known recently during a workshop on the recovery of the Nigerian power sector, in Abuja.

According to him, the subsidy arrears will be offset by the end of 2022.

EnergyDay gathered that the N247bn represents what is left of the historic accumulation of tariff shortfalls after the last payment of  N1.891trn  was made in 2021.

In 2021, the Government had announced its plans to put an end to the power subsidy regime in Nigeria by the beginning of 2022. This was effected discreetly in February 2022 when electricity tariff was also raised and approved by the Federal Government.

EnergyDay check revealed that Nigeria started paying  N30bn monthly to subsidise the electricity market , particularly, the commercial operations of the Power Distribution Companies (DisCos) and its counterpart responsible for power generation.

The unwholesome practices continued for about 5 years with very negative impact on consumers and persistent counsel from the World Bank , urging President Muhammadu Buhari to terminate the unproductive payment of electricity subsidies.

Engr Belije Madu said that  “PSRP Financing Plan was approved in November 2021 as  a credible financing plan for the PSRP Programme which identified how tariff shortfalls should be paid. The plan also underscored the need to promote sustainable growth of the Nigerian Electricity Supply Industry (NESI).

“Tariff shortfall payment has been cut down from a historical accumulation of N1.891trn to N247bn in 2021, and the programme is on course for elimination by December 2022.”

While the Federal Government has effectively stopped paying subsidy of N30bn on a monthly basis, it adherently means that electricity consumers will have to bear the brunt of this payment.

EnergyDay conducted a check and discovered that there are 12. 8 million  consumers but  a larger percentage of 8.1 million are unmetered and more exposed to the higher cost of tariff.

Public disgust is on the increase concerning the quality of electricity supply services, with the grid system constantly failing to supply steady electricity.