Debate over new electricity tariff


By Anayo Ezugwu

DESPITE the directive by the House of Representatives Committee on Power to the National Electricity Regulatory Commission, NERC, to suspend the planned increase in electricity tariff, the federal government is still going ahead with the increase. Sale Mamman, minister of power, said the ministry and stakeholders of the electricity market are working towards establishing a predictable and equitable regulatory regime from the perspective of ratepayers and investors.

Speaking at the International Conference on Energy, Power Systems Operations and Planning, ICEPSOP 2020, in Abuja, Mamman revealed that the ministry was already working hard to address the challenges by improving metering. He earlier raised the alarm over the widening liquidity gap in the Nigeria Electricity Supply Industry, NESI, stressing that there is a need to reinforce market structures and enhance transparency.

In corroboration with the Central Bank of Nigeria (CBN), the Federal Ministry of Finance, and other relevant stakeholders, according to him, the ministry is to consolidate a portfolio of activities deemed critical to the success of the electricity market. “The widening liquidity gap in the sector makes urgent the need to reinforce market structures and enhance transparency. To address this challenge, we are working hard to improve metering in general and in particular the use of smart meters as well as smart grids.

“In addition, the ministry is coordinating with the regulator, Ministry of Finance, the Central Bank of Nigeria, and other stakeholders to consolidate a portfolio of activities deemed critical to success, such includes refinement of commercial, technical, and regulatory components of transaction agreements; promotion of discipline; enforcement of contract effectiveness a day; establishing a predictable and equitable regulatory regime from the perspective of ratepayers and investors,” he said.

Mamman said the ministry was focusing on electricity access for the teeming Nigerian population through the use of mini-grid and microgrid. The minister noted that energy access has been a perennial issue, particularly in Sub-Saharan Africa. Citing industry data, he said out of the 1.2 billion people without access to electricity, about half of them reside in the region. He added that the electrification rate in Nigeria stands at 55 percent in urban and 36 percent in rural communities. He said there ware already measures in place to promote rural electrification.

But the House of Representatives committee had on Tuesday, January 14, asked NERC to direct Discos to suspend the review until further consultations. Aliyu Magaji, chairman of the committee also directed Ahmed Abdul, acting permanent secretary, ministry of power, to send a correspondence to relevant agencies regarding the directive. “There are so many unresolved questions. We have to do it logically to ensure that at least… all of us know the feedback from Nigerians. On behalf of this committee, I will liaise with the Senate committee; put this on hold until proper consultations are achieved. The committee is directing you to halt this process until the honourable speaker finishes his consultation,” he said.

According to Magaji, the Nigerian Bulk Electricity Trading Company Limited, NBET, remains under the ministry of power contrary to a presidential directive which moved it to the ministry of finance. “We are talking of the law; I’m sure somebody must have misled somebody somewhere. This law (putting NBET under Ministry of Power) is yet to be repealed or reviewed,” he said. So, NBET still remains in the Ministry of Power as far as this Parliament is concerned, unless we change the law.”

Realnews recalls that NERC had on January 4, published new tariffs for the different Discos and categories of customers on its website, which was signed by its chairman and secretary, Prof. James Momoh and Dafe Akpeneye, respectively. The commission said that the order superceded the earlier one issued on the subject matter, adding: “the new tariff regime takes effect from January 1, 2020.’’

NERC noted that the order had taken into consideration other actual changes in relevant macroeconomic variables and available generation capacity as at October 31, 2019. The commission said the order was in line with updating of the MYTO operating -2015 Tariff Order for 2019.

This is in line with provisions of the amended MYTO Methodology. The minor review order released by the commission on January 3, has no immediate impact on end-user tariffs, Usman Arabi, NERC’s general manager, Public Affairs Department, said in a statement in Abuja.

Arabi said the order was to establish the impact of the exogenous macroeconomic parameters and costs outside the control of the utilities in 2019 and projections for 2020. He said the macroeconomic indices taken into consideration to conclude the exercise included rate of inflation, foreign exchange, gas price and volume of available electricity

“The order has further prescribed minimum market remittance threshold payable by the 11 Electricity Distribution Companies, Discos, and the projected tariff path until 2021. However, where actual end-user tariffs are likely to be impacted by the review, the required public and stakeholders consultations shall be implemented. This is in line with requirements of the Electric Power Sector Reform Act and Business Rules of the Commission,” he said.

– Jan. 24, 2020 @ 19:05 GMT |

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