Electricity tariff to rise by over 50%

Chairman and Chief Executive Officer, Nigerian Electricity Regulatory Commission, Dr. Sam Amadi

Nigerians are to start paying between 50 and 100 per cent more for electricity as from January next year, the Chairman and Chief Executive Officer, Nigerian Electricity Regulatory Commission, Dr. Sam Amadi, has said.

Contrary to some reports on Tuesday, Amadi said the approval of the review was likely to be done in November this year after wide consultations with stakeholders.

The NERC boss, who spoke with on the telephone on Tuesday, said that discussions were ongoing with government in this regard.

He said, “From all indications, after the review, tariff will go up by 50 to 100 per cent. The approval of the review will be done by NERC. What we are doing now is having consultations with all stakeholders, as well as discussing with government.”

The new electricity tariff being proposed in line with the ongoing reforms in the power sector will take effect from January 2012, according to Amadi.

With the planned tariff increase, those in the Residential Two category (residential customers with single-phase meters), where most customers belong, will pay between N10.85 and N14.60 per kw/h as against the current rate of N7.30 per Kw/h.

For the R3 category customers, who are currently paying N11 per Kw/h, the reviewed rate would be between N16.50 and N22.

For Residential One category (comprising the lowest-paying customers), who are now paying N2.20 per Kwh, they will be made to pay between N3.30 and N4.40.

Highest-paying customers, who now pay N15.60 per Kw/h, are to pay between N23.40 and N31.20.

He had earlier in the year said the planned tariff structure was hinged on the ability of price to play its natural role of catalysing efficient allocation of resources, thereby promoting availability, affordability and accessibility of electric power to all Nigerians.

He said that the approval would enable the commission to engage further with all stakeholders and also align the review date with the calendar of most businesses, especially those in the electricity supply industry.

He said that the commission would spare no effort in ensuring that data supplied by operators for the process were subjected to the highest level of scrutiny and verification to demonstrate fairness to all stakeholders.

The NERC boss, who had also commented on the Multi-Year Tariff Order, said it provided for a periodic review of the cost parameters through the minor annual and major five-year review windows, adding that the annual review of framework took into cognisance changes in gas price, inflation and exchange rates, while the major review considered holistic changes in major parameters.

“The review is aimed at ensuring that prices at all times reflect the prevailing economic circumstances in Nigeria. It is on record that between 2008 and now, the MYTO has undergone two minor reviews in line with the methodology,” he said.

According to him, despite these attributes of MYTO, the market has yet to become robust; it has also failed to achieve optimum efficiency and milestones as envisaged by the commission.

He said, “The much needed private sector investment, especially in the distribution sector, has not materialised. And this is likely to continue as long as the Federal Government continues to hold on to the responsibility for policy making, regulatory and operational management across the three sectors of the Nigerian Electricity Supply Industry.

“Such market imperfections as low generation capacity, low private sector participation, high and unprecedented operating costs and overheads still abound in the industry today as in 2008. Prompt payment for gas feedstock has persistently been difficult even as gas supply has improved in the last few months.”

Amadi also said that the general belief in the electricity sector was that the current MYTO prices still could not support investments therein as they were much lower than in most developing countries.

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