…N2.3 Trillion Other Debts
Nigerian electricity consumers face an uncertain future as the power sector continues to flounder under a staggering N7.2 trillion burden of subsidies and accumulated debts.
Recent reports reveal that the country’s electricity consumers are grappling with a multi-year tariff structure established by the Nigerian Electricity Regulatory Commission (NERC), raising concerns about the looming financial legacy for future generations, estimated at $5.7 billion in loans from the World Bank and African Development Bank and an additional N2.3 trillion from local banks.
Electricity costs are currently spread across various components, with consumers paying N50 per kilowatt hour (kWh) for gas supply, N70/kWh for generation, and N77/kWh in distribution costs, totaling a composite tariff of N208/kWh. The NERC’s figures also highlight alarming aggregate technical, commercial, and collection (ATC&C) losses of 39.1% within distribution companies (DisCos), translating to significant unaccounted energy costs that consumers bear.
The historical underperformance of the power sector is exemplified by the national grid’s over 160 collapses since 2013, which have cost generation companies (GenCos) approximately N229.6 billion annually. Stakeholders express despair over the financial and operational inefficiencies of the DisCos and the Transmission Company of Nigeria (TCN), compounded by a tariff structure that still charges consumers for debt repayment linked to poorly utilized loans.
The rising electricity subsidy has escalated alarmingly over recent years, climbing to N2.3 trillion in 2024. Projections suggest it will hover around N2.2 trillion in 2025. The ramifications of continuing these subsidies are profound, as they place the financial burden squarely on taxpayers, who receive little improvement in power supply in return.
Experts warn that unless the NERC and the Federal Competition and Consumer Protection Commission (FCCPC) take decisive action, the already weak grid may further undermine manufacturers and households, who often resort to expensive alternative energy solutions, consequently inflating production costs by over 50%. As one expert noted, “This situation shields inefficient electricity companies from accountability, hindering growth and stability in the nation’s economy.”
SOURCE: Princetimmynewz1