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Generation Falls Amidst Rising Electricity Consumption – CBN



Generation Falls Amidst Rising Electricity Consumption

The Nigerian energy sector underperformed in the second quarter of the year as the sector witnessed a decline in electricity and crude oil production due to legacy infrastructure challenges in the upstream sector.

Latest Quarterly Economic report by the Central Bank of Nigeria (CBN) for the Q2 2023 period revealed that electricity generation fell resulting from limited gas supply and low water level from hydrogeneration plants, higher costs for upgrade and the bureaucratic maintenance of generation network.

Amid the decline in generation however, Nigerians consume more electricity, a development spurred by improvements recorded in transmission infrastructure across the country.

The report read: “There was, however, an increase in electricity consumption due to improvement in transmission network as energy loss declined.

“The average electricity consumption at 3,601.44, increased by 3.1 per cent in Q2 2023, relative to 3,494.16 MW/h in the preceding quarter.

“Contrastingly, the average electricity generation in Q2 2023 at 4,058.93 MW/h, decreased by 6.2 per cent, compared with 4,327.77 MW/h in Q12023.”

Elsewhere, Nigeria’s hitherto major revenue source for the government, crude oil, export also declined, quarter-on-quarter, as a result of reduced production and force majeure on crude oil liftings by Exxon Mobil, following an industrial action by its in-house workers union.


Consequently, the Federation Account earnings followed suit due to the shortfall in earnings from oil sources.

Specifically, at N3.193 trillion, gross federation revenue was below the level in 2023 Q1 by 8.4 per cent. Similarly, it fell short of the budget benchmark of N5.294 trillion by 39.7 per cent.

Conversely, non-oil revenue continued to dominate government revenue, accounting for 74.7 per cent, while oil receipts accounted for 25.3 per cent.

A disaggregation of Federation Account Revenue indicates that oil revenue, at N809.02 billion, fell by 39.7 per cent relative to Q1 2023 and was below the quarterly target by 66.4 per cent.

“The sub-optimal performance was indicative of revenue shortfalls from Petroleum Profit Tax and Royalties, following lower domestic crude oil production.

“Conversely, at N2.384 trillion, non-oil receipts improved by 11.1 per cent relative to the preceding quarter but was 17.3 per cent short of the quarterly target of N2.883 trillion.

The improvement was attributed to strong performance of receipts from Corporate Tax and FGN Independent Revenue, which exceeded collections in the preceding quarter by 15.4 and 42.9 per cent, respectively. Generally, non-oil revenue performance in the quarter, mirrored seasonality in tax returns.

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