Despite ₦2.8 Trillion Subsidy, Power Averages 3,000MW In 10 Years
There are indications that the tariff shortfall may climb to record high in the second half of this year following the suspension of the sector’s Multi Year Tariff Order, implemented through the Service-Based-Tariff (SBT). The SBT had relieved the government and passed the burden of the sector’s inefficiencies to consumers.
Crumbling due to the liquidity crisis, Nigeria’s power sector has distorted the books of financial institutions and pushed Small and Medium Enterprises as well as manufacturers out of business while failing to report profit.
This comes as stakeholders in separate interviews, insisted that the privatisation of the electricity sector has failed and that cosmetic solutions being deployed by the government would only add salt to the wound.
With daily electricity off-take by the distribution companies hovering around an average of 3,000 megawatts in the last 10 years as DisCos’ remittances remained below par despite series of intervention by the Nigerian Electricity Regulatory Commission (NERC), Aggregate Technical Commercial & Collection (ATC&C) losses by some DisCos still stand at about 75 per cent.
After privatising the power sector with an intention of making it self-sufficient, in 2015, the Federal Government spent N225 billion in tariff subsidies, in 2016, N308 billion was spent, in 2017, it was N351 billion, N440 billion in 2018, N528 billion in 2019, in 2020, it was N501 billion, in 2021, it came to N251 billion, in 2022 it was N144 billion and in the first half of 2023 it was N57 billion.
Although the subsidy came down from N528 billion in 2019 to N144 billion in 2022 as the SBT used unrealistic yardsticks to make consumers pay more for unimproved supply, the current economic indices, especially the floating of the naira, inflation and foreign exchange crisis may push the subsidy to record highs