Rich customers benefiting more from electricity subsidy – NERC

The Nigerian Electricity Regulatory Commission (NERC) has stated that rich customers constitute the highest consumers of electricity in the country thus enjoying more of the subsidy provided in the sector. In its 2022 Market Competition Report released yesterday, NERC stated that end-user tariff subsidy in Nigeria is pro-rich as the top-income group consumes more electricity […]

The Nigerian Electricity Regulatory Commission (NERC) has stated that rich customers constitute the highest consumers of electricity in the country thus enjoying more of the subsidy provided in the sector.

In its 2022 Market Competition Report released yesterday, NERC stated that end-user tariff subsidy in Nigeria is pro-rich as the top-income group consumes more electricity than the low-income group, thereby benefiting more from subsidy than the lower-income earners.

This is just as it stated that the average price spent on electricity is $0.14, translating into N64.4 using the previous official forex rate in the country, kilowatts per hour kWh and was relatively lower than the average electricity tariff in most ECOWAS countries.

The report said households’ connection showed that 79 per cent of the richest group and 68 per cent of the high income group are connected as compared to the poorest and low-income groups with 21 per cent and 41 per cent connection rates respectively.

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It, therefore, concluded that “The current state of the Nigerian power sector characterised by tariff subsidy mostly benefits the (relatively) rich as more rich people are connected and consume more electricity.”

It added that the end-use tariff in Nigeria is lower than the end-use tariff in 11 of the 16 ECOWAS countries partly due to the tariff subsidy provided by the federal government and the relatively cheaper gas price in the country.

It stated that the sector currently operates non-uniform tariffs with end-use tariffs varying from one DisCos to the other due to the different cost structures of the companies and associated operational efficiency.

It said from 2019, the weighted average end-user tariff was the highest under Enugu DisCo but in 2022, customers under Abuja DisCo had the highest weighted average tariff for electricity reflecting changes in the company’s cost.

The report stated that installed capacity in the Nigerian Electricity Supply Industry (NESI) grew by 7.95 percent from 12,132MW as at December 2015 to 13,097MW as at December 2022.

“The available capacity stood at 4,059MW as of December 2022 while the commission continues to provide direction and guidance towards overcoming the multitude of NESI challenges the daily average generation has continued to grow.”