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Electricity Consumers will have to pay new electricity tariff charged by the power firms and approved by the Nigerian Electricity Regulatory Commission in October
| By Anayo Ezugwu | Oct 5, 2015 @ 01:00 GMT |
ELECTRICITY consumers in the country are to brace-up for an increase in the electricity tariff in October. The Nigerian Electricity Regulatory Commission, NERC, is to approve a new tariff regime which the distribution companies, DISCOs, will now be charging. Sam Amadi, chairman, NERC, at the Powering Africa Conference, said the period for submission of tariff review applications by DISCOs closed early September and the review of these applications for possible ratification would be conducted in the next 30 days.
The reason for the expected hike is to ensure cost-reflective tariffs in the Nigerian electricity supply industry, capable of attracting private investments, especially foreign direct investments and to ensure that these investments were bankable. He warned that a balance needed to be maintained between investments attraction and winning the confidence of consumers. “Bills will go up, but service quality also has to be ensured. We have to bear that in mind,” Amadi told a gathering of Nigerian power sector operators as well as local and foreign investors, including representatives from Manitoba Hydro International and the Africa Finance Corporation.
According to Amadi, the public hearing on the power sector was for a minor review of the few indicators that the electricity market had to track. He exonerated the commission from the outcome of the review which he attributed to economic fundamentals. “Our job is to track them; we don’t manufacture them; we don’t create them, but we track them to ensure that they are actually reflected in the modem. We retrieve them from the official sources that are authorised by law. So, whatever you see here know that we traced the macroeconomic data as they develop over the months and feed them into our formula so that the outcome will be clear to all.”
He stressed that it would have been completely irresponsible of the commission to approve a tariff hike when a new administration was just assuming office in June this year. But now, the stage is set for increase because the electricity market is stable and needs to move on. “Now, the order said six months. It will be unfrozen in June.
“June came and I told you why it wasn’t done: because a new government just took over on the 1st of June and that will be totally irresponsible to unlock tariff at that stage. Now that we have some stability we need to move to the next stage. And so, we have now shown what that should be. This is a formula. It has not yet translated to anybody’s tariff. What the DISCOs will now do is to take this short-fall. I will show you the new tariff, to see the short-fall. They will put it into their modem and control it for 10 years,” Amadi said.
The Electric Power Sector Reform Act (2005) empowers NERC to review electricity tariffs in favour of GENCOs and DISCOs, if market variables such as gas and its transportation cost, as well as naira to dollar ratio and inflation shift by more than 5 percent. And an estimated 40 to 50 percent of electricity consumers in Nigeria are not metered. The metering gap creates energy pricing credibility problems between DISCOs and their customers, as well as between NERC and DISCOs. This has formed a major source of uncertainty and discouragement for current and prospective investors into the Nigerian power sector.
If the plans are anything to go by, customers of the Abuja Electricity Distribution Company, AEDC, will record 25 per increase, Benin Electricity Distribution Company, BEDC, will have to contend with 21 percent hike, Ibadan Electricity Distribution Company, IEDC, have a marginal 1.76 percent increase to cope with. The Enugu Electricity Distribution Company, EEDC, have 19.25 percent rise to bear. There was no information yet on what customers of Port Harcourt, Ikeja, Eko and other companies will be paying at the frozen point to allow a comparative analysis of their new tariffs.
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