The Nigerian government may impose another increase in electricity rates in October 2024, given that the nation’s monthly power subsidy increased to N181,63 billion in September.

This occurs at the same time that the Federal Government’s electricity subsidy increased from N102.30 billion in May to N181,63 billion in September.

The government has paid N163.87 billion in July, N173.88 billion in August, and N181.63 billion in September 2024 in the previous three months.

This follows the announcement on April 3, 2024, by the Nigerian Electricity Regulatory Commission that subsidies in areas classified as Band A feeders would be eliminated.

At that time, N140.7 billion was the monthly electricity subsidy, according to information provided by NERC.

As a result, NERC approved an increase in the electricity tariff to N225 per kilowatt-hour for customers who receive at least 20 hours of electricity every day.

However, the decision caused significant outcry from Nigerians, particularly labour organisations, educational institutions, and health care facilities whose electricity rates tripled once the subsidy was removed.

The government cut the Band A price to N206.80/kWh in May after the subsidy amount fell to N102.30 billion.

According to NERC, the decrease in the value of the Naira relative to the dollar was the cause of the cut.

But while the subsidy increased once more to N158 billion in June, the rate was abruptly raised to N209/kWh in early July.

As a result, the NERC estimated that the dollar exchange rate would be N1,494.1 in July, N564.3 in August, and N1601.5 in September throughout the review period.

In accordance with Section 167 of the Petroleum Act, as of September, the Nigerian Midstream and Downstream Petroleum Regulatory Authority’s benchmark gas-to-power price of $2.42/million British thermal units is upheld by the NERC.

This illustrates Nigeria’s increasing electricity generation costs.

This development, together with the nation’s inflation rate, which was 32.15 percent in August 2024, had sparked rumours that, barring a decline in the cost of electricity generation, there might be another tariff rise in the October Multi-Year Tariff Order.