Consumers to pay N225 kilowatt per hour from the current N66.
By Halimah Olamide
The Federal Government on Wednesday announced that a new regime of tariff is now in force for electricity consumers in the country.
The announcement was made by the Nigerian Electricity Regulatory Commission (NERC) whose Vice Chairman, Musiliu Oseni said at a press conference in Abuja that the increase will first affect urban based consumers.
Last year, the federal government said it spent a total of N378.5bn on subsidising power consumption between January and September. The NERC had stated last year that the spending on power was due to the absence of cost-reflective tariffs.
It said, “In the absence of cost-reflective tariffs, the government undertakes to cover the resultant gap (between the cost-reflective and allowed tariff) in the form of tariff shortfall funding. This funding is applied to the NBET (Nigerian Bulk Electricity Trading Company) invoices that are to be paid by Discos.
“The amount to be covered by the Disco is based on the tariff that they are allowed to charge and set out as their Minimum Remittance Obligation in the periodic Tariff Orders issued by the Commission.
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“It is important to note that due to the absence of cost-reflective tariffs across all Discos, the government incurred a subsidy obligation of N204.59bn in 2023/Q3 (average of N68.20bn per month), which is an increase of N69.37bn (+51.3 percent) compared to the N135.23bn (average of N45.08bn per month) incurred in 2023/Q2; this increase is largely attributable to the government’s policy to harmonise exchange rates.
“The rise in the government’s subsidy obligation meant that in 2023/Q3, Discos were only expected to cover 45 percent of the total invoice received from NBET. For ease of administration of the subsidy, the MRO is limited to NBET only with the MO (Market Operator) being allowed to recover 100 percent of its revenue requirement from the Discos.”
According to Oseni, those who are in Band A (who enjoy 20 hours of electricity per day) will be affected by the hike from N66 to N225.
Oseni further said that the NERC had also downgraded some customers on the Band A to Band B due to non-fulfilment of the required hours of electricity provided by the electricity distribution company.
“We currently have 800 feeders that are categorised as Band A, but it will now be reduced to under 500. This means that 17 per cent now qualify as Band A feeders. These feeders only service 15 per cent of total electricity customers connected to the feeders.
“The commission has issued an order which is titled April supplementary order and the commission allows a 235 kilowatt per hour,” he said.