Power generation costs increased by 83% in 11 months – Report

The cost to generate a unit of electricity per kilowatt-hour in Nigeria has increased from N63.8 in January to N117.27 in November 2024, findings by Saturday PUNCH have shown.

This substantial increase which amounted to an additional N53.47 per kilowatt-hour over 11 months, and 83.8 per cent rise, has been primarily driven by the depreciation of the naira against foreign currencies and the rise in the price of natural gas.



Nigeria generates over 70 per cent of its electricity from thermal power plants that are fired by gas. Also, the naira has consistently depreciated against foreign currencies, currently trading at N1,693 per dollar. A report by the Nigerian Electricity Regulatory Commission in its monthly supplementary order, and analysed by our correspondent on Friday showed that the price of generating electricity has increased throughout the year without reflecting in the total cost charged to customers due to the current subsidy regime.

A monthly breakdown of the data showed that generation cost per unit kilowatts increased by N37.7 from N63.8 in January to N101.

5 in February. The amount surged to N103.9 in March and remained the same in April.

By May, the cost was reduced to N87.3 before increasing by N17.15 to N104.

45 in June. Further analysis showed that N106.19 was charged as electricity cost per unit in July, N111.

09 in August, N113.69 in September, N116.09 in October and N117.

27 in November. Related News Naira may depreciate further during yuletide – Report FAAN to shut down power at Lagos airport 2bn litres of petrol imported in one month — Report While the end-user cost-reflective tariffs moved from N176.9 per unit kilowatts in January to N200.

6 in November. Similarly, the exchange rate adopted by the commission increased from N919.39 in January to N1,654 per dollar as of November 2024.

The NERC had on April 3 cut off subsidy payment in areas categorised as Band A, in an attempt to reduce subsidy obligations. This has since raised the tariff in Band A to above N200 per kilowatt-hour from N68. The absence of cost-reflective tariffs was said to have caused the Federal Government to undertake to cover the resultant gap between the cost-reflective and allowed tariff in the form of tariff subsidies.

On Monday, The PUNCH reported that the monthly spending of the Federal Government on electricity subsidy obligation had reached N1.91tn in the first 11 months of 2024. The amount incurred between January and November 2024, represents an increase of N1.

283tn from N628.61bn recorded in 2023. A breakdown showed that N633.

30bn was incurred as an electricity subsidy in the first three months of 2024. It however reduced to N380bn in the second quarter. In the third quarter, spanning July, August and September, the amount surged by 36.

46 per cent, totalling N518.55bn. The subsidy costs for October and November were N380.

06bn despite several incidents of the national grid collapse..