The current state of the Nigerian power sector characterised by tariff subsidy mostly benefits the relatively rich as more rich people are connected and consume more electricity, according to the Nigerian Electricity Regulatory Commission.
According to the 2022 Market Competition Report newly released by the Commission, 79 percent of the richest group and 68 percent of the high-income group are connected as compared to the poorest and low-income groups with 21 percent and 41 percent connection rates, indicating that more top-income groups are connected than low-income groups.
It was estimated by the World Bank (2021); that 59.5 percent of the distribution of the tariff subsidy goes to the richest 20 percent of the households; while only 1.5 percent benefits the poorest 20 percent.
Meanwhile; in comparison of end-user electricity tariffs in the Economies of West African States member countries, NERC said the end-user tariff in Nigeria is lower than electricity tariff in most others.
Available data on electricity tariffs in West Africa revealed that the average electricity tariff in Nigeria in 2021 was US$0.14/kWh and was relatively lower than the average electricity tariff in most ECOWAS countries;
The NERC said the relatively low electricity tariff in Nigeria was partly due to the tariff subsidy provided by the Federal Government and the relatively cheaper gas price to the power sector in Nigeria.
“End user tariff subsidy in Nigeria is pro-rich as top-income group consumes more electricity than low-income group, thereby benefiting more from subsidy than the lower income earners,” the report added.
The end-user tariffs vary by each Disco and depict a general increase between 2019-2022.
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