FG to Pay ₦471.69 billion in electricity subsidies for 2024 Q4

The federal government is set to cover ₦471.69 billion in electricity subsidies for the fourth quarter of 2024, according to the latest report from the Nigerian Electricity Regulatory Commission (NERC). This expenditure accounts for 57% of total generation costs during the period, stemming from the government’s decision to maintain end-user tariffs at July 2024 rates.

The report also indicates a notable improvement in the remittance performance of electricity distribution companies (DisCos), which reached 92.68% in Q4 2024, compared to 83.77% in the previous quarter. This suggests increased financial compliance from the DisCos despite ongoing liquidity issues and substantial subsidy obligations.

During the period under review, the total amount payable by DisCos stood at ₦431.16 billion, covering ₦368.94 billion in generation costs from the Nigerian Bulk Electricity Trading (NBET) and ₦62.22 billion for transmission and administrative services by the Market Operator (MO). Of this amount, DisCos collectively remitted ₦399.54 billion, leaving an outstanding balance of ₦31.62 billion. This represents a significant recovery from previous quarters, where remittance rates fluctuated due to operational challenges.

According to NERC, local and international bilateral customers also made payments during Q4 2024, with international customers remitting $2.98 million, while domestic customers paid ₦135.81 million in outstanding invoices.

In terms of revenue collection, DisCos recorded a total of ₦466.69 billion in Q3 2024, from a total billing of ₦626.02 billion, translating to a 74.55% collection efficiency. However, collection efficiency increased to 77.44% in Q4, reflecting a 2.89 percentage point improvement over the previous quarter.

The report also highlighted operational performance, with the average available generation capacity rising by 3.84%, from 5,100.90MW in Q3 to 5,296.89MW in Q4. This was attributed to improved plant availability across grid-connected power plants, with fifteen plants reporting higher generation capacities than in the previous quarter.

Despite this, total electricity generation saw a slight decline of 1.70%, dropping from 9,450.76GWh in Q3 to 9,289.95GWh in Q4. The decrease was linked to a reduced energy offtake by grid-connected customers, indicating a disconnect between generation capacity and actual consumption.

Billing efficiency also improved, increasing to 83.66% in Q4 from 82.15% in Q3, reflecting better management by DisCos in minimizing billing losses and enhancing customer engagement. However, Aggregate Technical, Commercial, and Collection (ATC&C) losses remained high at 35.22%, still significantly above the target of 24.78%, indicating that further improvements are needed within the distribution network.

Customer complaints dropped by 16.13% compared to Q3, but only 29.45% of these complaints were successfully resolved, with metering and billing discrepancies remaining the most pressing issues.

The report also raised concerns about health and safety within the electricity sector, with 54 accidents recorded in Q4, resulting in 26 fatalities. This alarming figure underscores the urgent need for enhanced safety protocols across the industry.