- Nigeria continues to maintain the lowest electricity tariff in West Africa.
- Despite the seemingly low rates paid by Nigerian customers, the actual cost of supplying electricity, known as the cost-reflective tariff (CRT), stood at US$0.12/kWh (₦175.31).
A report from the Nigerian Electricity Regulatory Commission (NERC) has disclosed that despite $14.01 million in outstanding electricity debts owed by Togo, Benin, and the Niger Republic, Nigeria continues to maintain the lowest electricity tariff in West Africa.
According to NERC’s 2024 Annual Report, the three West African power utilities—Nigerienne d’Électricité (NIGELEC) of the Niger Republic, Société Béninoise d’Energie Electrique (SBEE) of the Benin Republic, and Compagnie Énergie Électrique du Togo (CEET) of Togo—failed to remit $14.01 million for ancillary services provided by the Nigerian electricity market during the year under review.
The report stated that the three utilities were invoiced a total of $56.07m for services rendered by the Market Operator (MO), an arm of the Transmission Company of Nigeria (TCN).
However, the trio only remitted $42.06m, representing a remittance performance of 75.01 per cent, leaving an outstanding balance of $14.01m.
The statement also stated that the average allowed end-use customer tariff in Nigeria was US$0.07/kWh (approximately ₦100.27/kWh).
This figure represents just 35.71 per cent of the US$0.19/kWh average tariff charged in other selected West African countries.
Despite the seemingly low rates paid by Nigerian customers, the actual cost of supplying electricity, known as the cost-reflective tariff (CRT), stood at US$0.12/kWh (₦175.31).
According to the commission, the CRT in Nigeria was only 63 per cent of the average rate in the reference countries, further underlining the scale of the government’s intervention to bridge the pricing gap.
NERC noted that the widening difference between the allowed tariff and the CRT resulted in an average subsidy of ₦75.04/kWh in 2024, one of the highest in recent years.
The report also revealed wide disparities among Distribution Companies (DisCos) across the country.
The commission stated that Yola DisCo recorded the highest cost-reflective tariff, a trend attributed to its service territory’s heightened operational costs, vandalism, and security challenges.
However, with an allowed tariff still pegged at the national average, Yola DisCo benefited from the highest per-unit subsidy, receiving nearly twice the average subsidy per kilowatt-hour (kWh) compared to other DisCos.
In contrast, Ikeja and Eko DisCos operated with relatively lower CRTs and, consequently, lower subsidy allocations per unit of electricity delivered.
It was reported that the Federal Government’s electricity obligation was ₦91.63bn in the last quarter of 2024.
The federal government’s rising subsidy burden stems from the gap between the allowed end-user tariffs and the actual cost-reflective tariffs.
The tariff freeze at December 2022 rates was in effect throughout 2024, and the Federal Government incurred a ₦633.30bn subsidy in Q1 alone, a 303 per cent increase over the 2023 quarterly average of ₦157.15bn.
However, the upward tariff review for Band A customers in April 2024 helped reduce the subsidy to ₦380.06bn in Q2; a new directive freezing tariffs at July rates for the remainder of the year reversed this progress.