Consumers May Pay More As NERC Reviews Electricity Tariff

Electricity consumers in the country are expected to start paying more for power as the Nigerian Electricity Regulatory Commission (NERC) is set to roll out new electricity tariffs after approving the review of the Multi Year Tariff Order (MYTO), which will take effect on June 1. Some may however pay less than others, according to details of the review.

The chairman of NERC, Dr Sam Amadi, stated this on Monday in Abuja while speaking with journalists.

According to him, the new tariffs would not be equally served to consumers nationwide, as some parts of the country would have reduced tariffs and others would have theirs increased according to the cost incurred by the consumer’s Electricity Distribution Company (DISCO).

He said that the MYTO provided for bi-annual reviews that would take effect on June 1 and December 1 to ensure that some critical and financial variables underlying electricity tariff in Nigeria were still realistic and current.

“These variables are the rate of inflation, the exchange rate, gas price and available generation capacity. To ensure that the Nigerian electricity market remains financially viable and able to attract investment to improve capacity and reliability, electricity prices are indexed to changes in variables,” he said.

The chairman said the result of the review indicated a reduction of the wholesale tariff that would be paid to Electricity Generation Companies (GENCOs) as from June 1, 2014.

“The general public is to note that the wholesale tariff paid to GENCOs is one of the three components that make up the total tariff paid by consumers; the other two parts are the transmission and distribution components.”

He said the capacity from the grid as of March 31 review date was 4306 megawatts (MW), which was well below 9061MW that the commission had projected when MYTO2 was set in June 2012.

“This is a 52 per cent reduction on the projected, the consequence of this loss of available capacity completely outweighs the benefits that were gained from positive macroeconomic indices,” he added.

The chairman disclosed that the direct consequence for the Nigerian Electricity Supply Industry (NESI) was that the significant fixed cost incurred by all the three sectors had to be spread over a much lower quantity of energy projected to be sold to consumers and that for that reason, the consumer tariff would have to increase.

Dr Amadi said all the new tariffs would be posted on the commission’s website and also published on national newspapers.

He said that NERC’s commitment to regulatory due process and its determination to ensure that it regulates the sector in a manner that ensures efficiency gains for consumers have resulted in confidence of local and foreign investors to continue to invest in expanding and strengthening reliability in the Nigerian electricity market.


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