June 15, 2024

Electricity Tariff Set to Increase By Over 40% 



By: Ogunleye Oluwapelumi


Nigerians may need to prepare for tougher times as electricity tariff is set to increase by over 40% in the coming days, a development which may eventually end all forms of energy subsidy in the country. With a monthly subsidy of about N50 billion still in the electricity sector owing to revenue shortfall, the tariff hike due from July 1, may be another acid test for the President Bola Ahmed Tinubu administration’s market reform.


The administration has already removed subsidies on Premium Motor Spirit (PMS) and floated the naira, decisions that have complicated the price-setting of the NERC 2022 Multi-Year Tariff Order (MYTO). Although the power sector players have been unable to meet the threshold of supplying at least 5,000 megawatts a year after signing contracts with NERC, NERC’s current Service Based Tariff was benchmarked on an exchange rate of N441/$ & inflation of 16.97%.


The tariff hike is expected to be a major blow to Nigerians who are already grappling with high cost of living, inflation and unemployment. It is also expected to have a ripple effect on businesses, as the cost of production will increase, and ultimately lead to the hike of prices of goods and services. The government has, however, assured Nigerians that it will continue to support the citizens during this time.

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