The Nigerian Electricity Regulatory Commission announces that there will be no increase in fixed charges from June 1, contrary to the expectation that it would go up by 100 percent in line with the prevailing multi-year tariff structure
| By Anayo Ezugwu | Jun. 9, 2014 @ 01:00 GMT
THE Nigerian Electricity Regulatory Commission, NERC, has said the regulatory agency would not increase the fixed charge of electricity in the country from June 1. Sam Amadi, chairman NERC, said electricity consumers will continue to pay N750 as fixed charge for electricity consumption instead of N1,500.
According to him, the decision to retain the current fixed charge was reached after the last minor review of tariffs meeting held with the relevant authorities. He said that if the review had not been carried out, power consumers would be paying about N1,500 as fixed charge beginning from June 1.
“Many of the customers should be paying by June 1, a fixed charge of about N1,500. Now, the adjustment has resulted in a decrease in such that the fixed charge will not change. If this review was not done, the fixed charge should have been about N1,500 in some places. But now, the reduction is that instead of having an increment in fixed charge, the consumers now have a decrease from N1,500 that would have been paid from June 1, to N750 for most places. The fact is that based on consumers’ concern, NERC has done the minor review in a manner that the consumers will pay less than they would have paid if there was no review. So, the consumer is paying less of the fixed charge and less of the energy charge,” he said.
Amadi explained that the positive economic fundamentals in the country had helped in the reduction of electricity tariff. He noted that the cost of gas, inflation rate and other fundamentals were stable for some time and had led to the downward review of the charge. “This shows that if the macro-economic fundamentals are good as they are, it will get better. And if we have more power coming to the grid and we are able to reduce losses through regulation, we can see that instead of the price spiralling up, we will get a reduction in tariff over time because we will get the savings that will go back to the consumers. It is already in the MYTO that every six months, there will be a minor review. The minor review deals with changes that would have happened in the preceding six months in terms of inflation rate, foreign exchange, cost of gas and generation capacity. So, what we do is that on March 31, we drew the line based on data available at that time from official custody like the Central Bank of Nigeria and the National Bureau of Statistics.
“The MYTO model prescribes that if there is a plus or minus five per cent increase or decrease in the difference of the aggregate of this data, then it triggers a review. But if the change is less than plus or minus five per cent, then it does not trigger a review. So, the review that we just finished, the rate is more or less than five per cent aggregate. We have done a petition to the CEOs and we have also approved the change in the review of the prevailing price.”
Meanwhile, Chinedu Nebo, minister of power, has said that the federal government would continue to create the enabling environment to attract investment in the power sector for efficient generation and distribution. He said there has been a lot of improvement in power generation despite the challenges in the sector and that this was as a result of the successful privatisation programme in the sector which was concluded in November last year.
Nebo said that vandalism and poor gas supply remained a big challenge to growth in the sector. The federal government, he said, is already applying effective measures to check the menace, and assured that all would soon be a thing of the past. The minister said he was certain that power generation and distribution companies could drive the sector without financial constraints as they had the resources to do so. He further called for equal emphasis on distribution as against generation where most investment interest had been directed.
“The federal government is already tackling the challenges of vandalism which is actually shutting out gas supply with the deployment of high-tech protection systems. We are also trying to stabilise the market as well as the national grid itself. The Gencos and Discos cannot say they do not have the finance to drive the power sector because they promised they could do so. What the government is doing now is to create an enabling environment by attracting financial institutions from all over the world and multinational development partners to come to their aid. The major trend is that these investors prefer to fund Gencos as opposed to Discos, and in a matter of time, both would be getting a fair share,’’ he said.