Kehinde Fajobi
The Federal Government’s annual electricity subsidy has skyrocketed to ₦2.4 trillion in 2024, marking a 269% increase from ₦650 billion in 2023, despite efforts to curtail costs through tariff reforms.
Dr Yusuf Ali, Commissioner for Planning, Research, and Strategy at the Nigerian Electricity Regulatory Commission (NERC), revealed this on Friday during PwC’s Annual Power and Utilities Roundtable in Lagos.
Speaking on the topic “Reigniting Hope in Nigeria’s Electric Power Sector”, he highlighted how macroeconomic shocks, particularly foreign exchange instability, caused cost-reflective tariffs to rise by 118%, driving up subsidy obligations.
“So right now, the best estimate that we have for 2024 is that the cumulative subsidy for the year will be ₦2.4 trillion,” Ali said.
He explained that while the introduction of the Band A tariff service category in April 2024 aimed to cut subsidies by ₦1.14 trillion, macroeconomic challenges had negatively impacted tariff payments.
Without reforms implemented between 2020 and 2023, annual subsidies would have been even higher, especially given the shocks of the past 20 months.
The Minister of Power, Chief Adebayo Adelabu, represented by his Chief Technical Assistant, Adedayo Olowoniyi, emphasised the administration’s recognition of energy as crucial to economic growth and job creation under the “Renewed Hope Agenda.”
“To ensure the sustainability of the energy sector, the Federal Government of Nigeria has implemented a multi-pronged approach spanning legislation with the enactment of the Electricity Act 2023, policy framework with the development of an Integrated National Electricity Policy, and national infrastructure development programmes to expedite infrastructure expansion,” Adelabu stated.
He added that the government is leveraging bilateral funding, commercialisation efforts, and strategic partnerships to address challenges in the Nigerian Electricity Supply Industry (NESI).
Adelabu acknowledged persistent issues such as grid disturbances, aging infrastructure, resource limitations, and vandalism.
“We are actively addressing these challenges to ensure energy security and sustainability across the country,” he said.
“In the short term, we have implemented measures such as reinforcing standard operating procedures, developing detailed maintenance plans for key transmission substations, conducting line tracing on frequently tripping lines based on data analysis, replacing outdated equipment at critical stations, and assessing the integrity of key nodes to prevent future disruptions.
“For long-term strategies, we are finalising plans for a super grid project to establish a more robust and resilient grid system.
“Today’s theme reminds us that hope is not a passive sentiment, but an active commitment.
“We must continue to innovate, collaborate, and implement bold ideas to restore confidence in our sector to deliver an energy future where every Nigerian has access to reliable, affordable, and sustainable power”, Adelabu concluded.