NERC Report Reveals Electricity Subsidies Surge To ₦135.2bn in Q2 2023

The Federal Government’s expenditure on electricity subsidies reached ₦135.2 billion in the second quarter of 2023, a substantial increase from the ₦36 billion spent in the first quarter. This information is reported in the quarterly update from the Nigerian Electricity Regulatory Commission (NERC).

According to the report, the government’s subsidy obligation in 2023/Q2 increased by ₦99.21 billion, representing a significant 275 percent rise when compared to the ₦36.02 billion spent in 2023/Q1. This increase is primarily attributed to the government’s policy to standardize exchange rates.

On average, the government’s monthly subsidy obligation in 2023/Q2 stood at ₦45 billion.

During this period, the total revenue collected by all Distribution Companies (DisCos) amounted to ₦267.8 billion out of the ₦354.61 billion billed to customers. The DisCos’ overall collection efficiency increased by 6.79 percentage points from the 68.75 percent recorded in 2023/Q1. While total collections increased by 8.41 percent compared to ₦247 billion in 2023/Q1, total billings declined by -1.33 percent compared to ₦359.3 billion in 2023/Q1.

The total electricity generated in the quarter decreased to 8,867.05 Gigawatt per hour (GWh), representing a 5.17 percent decrease compared to the 9,350.24GWh generated in 2023/Q1. This decrease was mainly due to 16 out of 26 grid-connected power plants experiencing reduced generation.

The reduction in electricity generation during 2023/Q2 can be attributed to a decrease in the available capacity of the power plants. Notably, two of the top-performing power plants in 2023/Q1, Olorunsogo and Alaoji NIPP, were unavailable for 84 days, which accounted for approximately 91% of the quarter. This unavailability was due to gas constraints and mechanical faults.

Additionally, all hydropower plants experienced decreases in their average generation during 2023/Q2. Shiroro hydro plant’s generation decreased due to the maintenance of one of its four units/turbines and water management issues caused by the depletion of dam reserves since the end of the rainy season in 2022/Q3.

Jebba had 50 percent of its turbines (289.2MW capacity) shut down in 2023/Q2 for a complete overhaul and replacement of key components, including the generator rotor, winding, and Automatic Voltage Regulator (AVR). Dadin Kowa was unavailable for 50 percent of the time in April and May due to low gross operating head.