The Nigeria Electricity Regulatory Commission (NERC) has said that the Federal Government must pay the sum of N3.2 trillion as subsidy for the electricity sector in 2024 to reverse the hike in electricity tariff.

Sanusi Garba revealed this at a stakeholders’ meeting convened by the House of Representatives Committee on Power at the National Assembly Complex in Abuja on Thursday.

He said that if a total sectoral overhauling was not carried out, including fluctuation in foreign exchange, power supply in Nigeria would continue to pose a challenge.

He said that before the increase in electricity tariff, the distribution companies were only obligated to pay 10 per cent of their energy invoice, adding that the lack of cash backing was creating a liquidity challenge in the sector.

He said the electricity tariff increased from 55 percent to 94 percent in between  January 2020 and January 2023, adding that “the unification of FX and current inflationary pressures are pushing cost reflective tariff to N184/kwh.”

He said, “If sitting back and doing nothing is the way to go, it would mean that the National Assembly and the Executive would have to provide about N3.2 trillion to pay for subsidy in 2024.”

Garba also said that only N185bn of the N645bn subsidy in 2023 has been cash-backed, leaving a funding gap of N459. 5bn.

Also speaking, Musiliu Oseni, the Vice Chairman of NERC, who also justified the recent increase in tariff said the increment was needed to save the sector from total shutdown.

Victor Nwokolo, the Chairman of the House Committee on Power, (PDP, Delta) said the essence of the meeting was to address the recent increase in tariff and the various bands to which electricity consumers were recently categorised.

The lawmaker said the officials of NERC and DISCOS had given the committee useful Information, noting that “We have not concluded with them because the transmission company of Nigeria was not here and the generation companies too.

“Of course, with the population explosion in Nigeria, the areas being covered are beyond what they estimated in the past and because they need to expand their network, they also need more money.’’

“Every day, there are changes to the exchange rate and there are also threats to power installations because of security, thereby increasing the overhead.

“The committee has not fully agreed with them because we are not saying either yes or no; we want to get more input and also find out the possibility of gas being sold to them in naira. More of this is dependent on generation and without the gas, you cannot have power.

“The committee cannot take any decision to stop the increase in tariff. That decision can only be taken by the entire House and not at the committee level. There must be a House resolution to stop it,” he said.