New Electricity Tariffs Coming Next Month

As part of the ongoing reform in the power sector, a new electricity tariff, which targets an increase of between 50 and 100 per cent to the current tariff, will be out by next month, contrary to earlier reports that the Nigerian Electricity Regulatory Commission (NERC) will release the approval this month, THISDAY has learnt. In accordance with the Multi Year Tariff Order (MYTO), aimed at gradual increment in tariff to attract private investors, NERC had initially planned to release the new tariff for all categories of electricity consumers in November 2011 but wide consultations with relevant stakeholders had delayed the approval.

The commission had in June 2011 announced an upward review of electricity tariff, as part of the last schedule of the 2008/2013 regime of MYTO, which became operational on July 1, 2011. MYTO was introduced in 2008 to ensure that prices of electricity were predictable and to mobilise funds for the power sector by attracting private sector investments through a tariff structure that guarantees adequate return on investment, while protecting electricity consumers against profiteering. Confirming the new time table for the release of the new tariff, the Chairman of NERC, Dr. Sam Amadi, told THISDAY Tuesday that the commission was still working on the new document.

“By early next month, we will announce it, but we are still working on it,” he said. Amadi was silent on the actual figures involved under the proposed tariff regime, as he stated that the issues were yet to be finalised. However, statistics obtained by THISDAY indicate that under the proposed regime, the highest-paying electricity consumers, who now pay N15.60 per kilowatt hour (Kw/hr), will pay between N23.40 and N31.20.

The Residential Two category of customers – residential customers with single-phase metres – where majority of electricity consumers belong, will pay between N10.85 and N14.60 per kw/hr. The Residential Three category of customers, will pay between N16.50 and N22, while the Residential One category – the lowest-paying customers, will pay between N3.30 and N4.40. The R2 category now pays N7.30 per Kw/h; while the R3 category customers are currently paying N11 per Kw/h, with the Residential One category paying N2.20 per Kwh.

The new figures are, however, subject to further review before the final approval by NERC, after the consultations with the various stakeholders involved in the electricity business, including the consumers. Amadi had stated that MYTO provided for a periodic review of the cost parameters through the minor annual and major five-year review windows. He said the yearly review of framework took into cognisance changes in gas price, inflation and exchange rates, while the major review considered holistic changes in major parameters.

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