PUNCH
Electricity customers on Band A feeders may need to brace up for a possible tariff increase following the rise in the electricity tariff shortfall otherwise known as subsidy.
The PUNCH reports that the electricity subsidy to be paid by the Federal Government rose to N181,63bn in September from N102.30bn in May.
In April when the Nigerian Electricity Regulatory Commission announced the removal of subsidy in areas categorised as Band A feeders, the subsidy was N140.7bn.
To ensure liquidity in the sector, the government stopped paying subsidies for Band A customers, who enjoy a minimum of 20 hours of electricity daily, raising their tariff to N225 per kilowatt-hour.
The decision generated outcries among Nigerians, including labour unions, and education and health institutions, whose electricity bills tripled following the removal of the subsidy.
In May when the subsidy figure dropped to N102.30bn, the government slashed the Band A tariff to N206.80/kWh.
However, the tariff was jerked to N209/kWh in early July as the subsidy rose again to N158bn in June.
According to data released by the NERC, the subsidy rose to N163.87bn in July, N173.88bn in August, and N181.63bn in September, fuelling speculations that there may be another tariff increase in the October Multi-Year Tariff Order unless the cost of power generation drops.
The PUNCH reports that the foreign exchange crisis has been the major driver of the electricity subsidy.
The NERC put the dollar exchange rate at N1,494.1 in July; 1,564.3 in August; and N1601.5 in September.
According to the regulator, the dollar rate and inflation are the determinants of the cost of power production.
