Electricity customers on Band A feeders may face a tariff increase as the subsidy reached N181.63 billion in September, reflecting rising costs.

Electricity customers on Band A feeders may face a tariff increase as the subsidy for September rose to N181.63 billion.Customers on Band A electricity feeders may soon see a tariff increase.

This potential rise is driven by a significant subsidy increase from the Federal Government, now reaching N181.63 billion in September, up from N102.30 billion in May.

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In April, when the Nigerian Electricity Regulatory Commission (NERC) removed subsidies for Band A customers, the subsidy stood at N140.7 billion.

Following the removal, Band A tariffs were raised to N225 per kilowatt-hour, leading to protests from various sectors, including labour unions and educational institutions, as their electricity bills skyrocketed.

In May, the subsidy decreased to N102.30 billion, allowing a temporary reduction in the Band A tariff to N206.80/kWh. However, tariffs rose to N209/kWh in July as subsidies fluctuated, reflecting the instability in the electricity market.

Recent data shows continuous increases in the subsidy, leading to speculation about a further tariff hike in the upcoming Multi-Year Tariff Order.

The primary factor for this surge appears to be the ongoing foreign exchange crisis, which significantly affects power generation costs.

The NERC has indicated that exchange rates and inflation are critical factors in determining electricity prices. As of September, the naira to dollar exchange rate was set at N1,601.50, while Nigeria’s inflation rate was 33.40%.

Despite rising production costs, the Federal Government has not yet approved another tariff increase, possibly due to ongoing economic challenges.

The Abuja Electricity Distribution Company reported consistent energy delivery, yet generation costs have seen fluctuations, contributing to the challenges faced by electricity distribution companies.