- Electricity subsidies gulped ₦2 trillion in 2020
- Agusto & Co reveals this in a report
In a report on the State of the Nigerian Electric Power Industry, a Pan-African Credit Rating Agency, Agusto and Co, have revealed that electricity subsidies accounted for 6% of the Central Bank of Nigeria (CBN) balance sheet in 2020. According to the report, the cost of the tariff shortfall borne by the Federal Government (FG) in terms of electricity subsidies and other power sector interventions amounted to ₦2 trillion in 2020.
The report further stated that, despite several interventions in the power sector, the Nigerian Electric Power Industry faces challenges due to non-cost-reflective tariffs, high losses, poor infrastructure, inadequate gas supply and weak policy implementation. The report also noted the impact of the COVID-19 pandemic on the collection efficiency of the distribution companies. As a result, the collection efficiency of Distribution Companies (DisCos) in 2020 fell to 66%. Consequently, the Aggregate Technical, Commercial and Collection (ATC&C) losses for the 11 DisCos rose to 51% in the same year from 45 per cent in 2019.
”Agusto & Co believes the impact of the pandemic was more visible among consumer groups with post-paid meters and estimated bills given that the social distancing rules and movement restrictions established to curb the spread of the virus impaired the physical billing process.” the report stated.