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Nigeria Faces Doable Electrical energy Tariff Hike in October as Energy Subsidy Hits N181.63bn
Abuja, Nigeria – One other electrical energy tariff hike could also be on the horizon for October 2024, because the Nigerian Authorities grapples with a rising month-to-month energy subsidy that reached N181.63 billion in September.
This marks a big rise from the N102.30 billion subsidy recorded in Might 2024. Over the previous few months, authorities expenditures on electrical energy subsidies surged to N163.87 billion in July, N173.88 billion in August, and N181.63 billion in September.
The rise follows the Nigerian Electrical energy Regulatory Fee’s (NERC) announcement in April 2024 of the elimination of subsidies for purchasers on Band A feeders, that are these having fun with not less than 20 hours of electrical energy each day. At the moment, the month-to-month subsidy stood at N140.7 billion.
As a part of the modifications, NERC accepted a tariff hike for Band A shoppers, elevating the electrical energy value to N225 per kilowatt-hour (kWh). This transfer, nonetheless, sparked widespread dissatisfaction throughout numerous sectors, together with labour unions, training, and healthcare, as many noticed their electrical energy payments triple.
In Might, a slight reprieve got here when the subsidy decreased to N102.30 billion, prompting a tariff discount to N206.80/kWh. NERC attributed this adjustment to a decline within the naira-to-dollar alternate fee. By July, nonetheless, the tariff was raised once more to N209/kWh as subsidies surged again to N158 billion in June.
The present interval has seen a pointy rise in each the subsidy and the alternate fee, with NERC citing greenback alternate charges of N1,494.1 in July, N1,564.3 in August, and N1,601.5 in September.
Moreover, the benchmark gas-to-power value stays at $2.42 per Million British Thermal Models (MMBtu), based on the Nigerian Midstream and Downstream Petroleum Regulatory Authority, consistent with the Petroleum Trade Act of 2021. This benchmark underscores the rising value of energy era in Nigeria.
The mixed results of excessive inflation, which stood at 32.15% in August 2024, and escalating energy era prices have fueled issues {that a} additional tariff improve could also be applied within the upcoming Multi-12 months Tariff Order until these elements are mitigated.
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