In October 2024, the Nigerian Government might introduce another electricity tariff hike as the monthly power subsidy rose to N181.63 billion in September, up from N102.30 billion in May. Over the past three months, the government paid N163.87 billion in July, N173.88 billion in August, and N181.63 billion in September.
This follows the Nigerian Electricity Regulatory Commission (NERC) announcement on April 3, 2024, to remove subsidies in Band A feeder areas, raising the monthly subsidy to N140.7 billion. Consequently, NERC approved a tariff hike to N225 per kilowatt-hour for consumers enjoying at least 20 hours of electricity daily, leading to significant backlash from Nigerians, including labor unions, educational, and health institutions, as their bills tripled.
In May, when the subsidy fell to N102.30 billion, the government reduced the Band A tariff to N206.80/kWh, attributing the reduction to a lower exchange rate. However, the tariff increased to N209/kWh in early July as subsidies rose to N158 billion in June. Throughout the period, the exchange rate increased from N1,494.1 in July to N1,601.5 in September.
In September, NERC maintained the benchmark gas-to-power price at $2.42 per Million British Thermal Units, based on the Nigerian Midstream and Downstream Petroleum Regulatory Authority’s benchmark. This suggests rising power generation costs in Nigeria, coupled with the country’s inflation rate of 32.15 percent in August 2024, leading to speculations of another tariff increase in the October Multi-Year Tariff Order unless generation costs decrease.
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