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Electricity tariff may rise as govt withdraws subsidy

The Nigerian Electricity Regulatory Commission (NERC) announced yesterday, that some electricity consumers in the country may pay more for energy from now to 2024.

There are also indications that the Federal Government would no longer subsidise any class of consumer by the end of this year as NERC planned to enforce 100 per cent remittance for all DisCos by the end of the year bringing to zero DisCos tariff shortfall, which stands at about 24, 521 for Ibadan DisCo

NERC had in a released yesterday said: “in compliance with the provisions of the Electric Power Sector Reform Act (EPRSA) and the nation’s tariff methodology for biannual minor review, the rates for service bands A, B, C, D and E have been adjusted by N2.00 to N4.00 per kWhr to reflect the partial impact of inflation and movement in foreign exchange rates.”

Denying earlier reports that 50 per cent increase had been approved for electricity tariff, NERC said tariff for customers on service bands D & E (customers being served less than an average of 12hrs of supply per day over a period of one month) remained frozen and subsidised in line with the policy direction of the Federal Government.

However if fully implemented through 2024 and compared with the pre-September tariff, all electricity consumers in the country would witness an increase in tariff up to about 120 per cent in an event of a full cost-reflective tariff, especially those under class A, B and C. In fact, by the second quarter of this year, some consumers, who were under Class D and E would have been paying N59 against the N26 they are currently paying for every kilowatt per hour.

GIVEN the liquidity crisis in the market and inability of the distribution companies to remit promptly, NERC had set a remittance threshold for the DisCo last year. The new order has jerked up the remittance for the DisCos as Ibadan DisCos has seen it minimum remittance increased from 29.4 per cent to 60.30 per cent.

The document dated December 30, 2020, overruled the previous Order NERC/2028/2020.

After a series of outrage and outright rejection by consumers who cited poor power supply and the impacts of COVID-19, DisCos had in October last year started the implementation of a service-based reflective tariff (SRT) structure.

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