FG approves increase in electricity tariff

President Muhammadu Buhari’s approval of the implementation of the proposed cost-reflective electricity tariff for the Nigerian Electricity Supply Industry (NESI) on Tuesday seems to have taken aim at the ‘high and mighty’ in the electricity consumption chain in Nigeria.

The tariff comes as a huge relief to the poor and nether regions of society, as residential areas classified as “poor” will not be affected by the increase in tariff.

The president also approved a one-year waiver of 35 per cent import tax for prepaid meters.

Recall that the Nigerian Electricity Regulatory Commission (NERC) in January had announced that there would be an upward review of electricity tariffs across the country from April 1.

Following the approval of the president, the new tariff system is expected to kick off on September 1, and will be subject to a quarterly review.

According to the new tariff via a NERC order dated December 31, 2019, Abuja Electricity Distribution Company (AEDC) residential customers R3 that were paying N27.20 per unit will now pay N47.09 and N63.42 by next year.

For the Ikeja Electricity Distribution Company (IKEDC) customers, the R3 category paying N26.50 per unit will now pay N36.49 per unit and later N58.

Meanwhile, President Buhari approved a one-year waiver of 35 percent import tax on prepaid meters to ensure it’s availability to consumers for accurate billing.

The approval came as a result of a request by Zainab Ahmed, minister of finance, to ensure the provision of prepaid meters under the meter asset providers (MAP) scheme.

In a statement, Yunusa Abdullahi, special adviser to the minister on media and communications, said the application of the levy on imported meters has caused a snag to the smooth implementation of MAP scheme.

“The 35 per cent levy was imposed on the recommendation of the Federal Ministry of Industry, Trade and Investment, to encourage local production, as well as protect investments in the local assembly of electricity meters,” Abdullahi said.

“An important feature of the MAP regulation is a gradual up scaling of the patronage of local manufacturers of electricity meters with an initial minimum local content of 30 percent with the potential of significant job creation in the area of meter assembly, installation and maintenance.

“Even though the 35 percent was in existence since 2015, the MAP regulations by NERC in 2018 to bridge current electricity metering gap did not factor the 35 percent levy in arriving at the regulated cost of electricity meters to end-users (consumers).

“This is to immediately bridge the gap between the demand for electricity meters and local supply. It is also envisaged that this will provide protection for local electricity meter manufacturers and the opportunity to ramp local capacity in the production of meters.”