No increase in electricity tariff, NERC clarifies
*Nigerians kick, urge revolution in power sector
Doosuur iwambe, Abuja
Nigerian Electricity Regulatory Commission (NERC) has debunked reports that it had approved the increase of tariff by 50 per cent.
The commission, in a statement on Tuesday stated that such increment was not contained in the tariff order for electricity distribution companies which took effect on January 1, 2021.
According to the statement, the tariff for customers being served less than an average of 12 hours of power supply per day over a period of one month remains frozen and subsidised in line with the policy direction of the Federal Government.
The statement read in part, “The attention of the Commission has been drawn to publications in the print and electronic media misinforming electricity consumers that the Commission has approved a 50% increase in electricity tariffs.
“The Commission hereby state unequivocally that no approval has been granted for a 50% tariff increase in the Tariff Order for electricity distribution companies which took effect on January 1, 2021.
“On the contrary, the tariff for customers on service bands D & E (customers being served less than an average of 12hrs of supply per day over a period of one month) remains frozen and subsidised in line with the policy direction of the FG.
“In compliance with the provisions of the EPSR Act and the nation’s tariff methodology for biannual minor review, the rates for service bands A, B, C, D and E have been adjusted by NGN2.00 to NGN4.00 per kWhr to reflect the partial impact of inflation & movement in forex.
“The Commission remains committed to protecting electricity consumers from failure to deliver on committed service levels under the service-based tariff regime.”
However, in a directive issued on December 31, 2020, and signed by Sanusi Garba, NERC chairman indicated that the commission was enforcinh a new Multi Year Tariff Order (MYTO), increasing electricity bill by over 50 per cent across the country.
According to directive, the new tariff will take effect from January 1, 2021.
The commission stated that the new tariff will be enforced until the issuance of another minor review order or an extraordinary tariff review order by the commission.
NERC disclosed some of the indices considered for the upward review include Nigeria’s inflation rate, exchange rate, US rate of inflation, available generation capacity, gas price, MDA losses and capex adjustment.
“This order supersedes ORDER/NERC/ 202B/2020 and shall take effect from January 1, 2021, and shall cease to have effect on the issuance of a new minor review order or an extraordinary tariff review order by the Nigerian Electricity Regulatory Commission (“NERC” or the “commission”).
“The actual average monthly inflation rate of 13.1% for the period January to November 2020 was used for review of the year 2020 tariffs, while, the November 2020 inflation rate of 14.9% as obtained from the NBS was adopted to project Nigerian inflation rates for the year 2021 and beyond.
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“In line with the MYTO Methodology, the CBN official exchange rates plus a premium of 1% were used for the retroactive review of the year 2020. Accordingly, average NGN/USD exchange rate (+1%) for the period 1st January 2020 to December 15, 2020, of N360.8 was used to review the year 2020 tariffs.
The NAFEX closing NGN/USD exchange rate (+1%) of N397.44 as at December 29, 2020, was adopted to project NGN/USD exchange rate for 2021 and beyond.
“The year 2020 projection on available generation is maintained for the first half (Jan-Jun) of 2021 to account for the impact of the delay in the implementation of MYTO-2020. No change was applied to generation projections from July 2021 and beyond.
“A benchmark gas price of $2.50/MMBTU, gas transportation cost of $0.80/MMBTU and gas prices outside the regulated rates for GenCos with effective gas sale agreements (“GSAs”) were maintained”, it stated.
It could be recalled that the electricity distribution companies (DisCos) in November 2020 began the implementation of a service-based reflective tariff (SRT) structure nationwide after receiving approval from President Muhammadu Buhari.
Meanwhile, Electricity consumers have reacted angrily to the new electricity tariff increase saying, they were surprise with the new development.
Reacting to the development during a telephone interview, an Abuja based Architect and inventor, Mr Cletus Aver said, he was not surprised with the development because he already know that Nigeria is a failed state.
He said, “in a failed state, you expect anything to happen. I will speak further that even with the increase, Nigerians will still not have light.
“The only thing that will solve the power problem in Nigerià is a revolution in the power sector. What I mean by revolution is that the government has failed in its responsibility to provide power and other essential needs for Nigerians.
” Nigerians are now left with the option to provide power for themselves. The government is a failure and people can only provide things for themselves”.
On her part, Ms Sandra Iwambe, a lecturer with Veritas University said, he was yet to recover from the last increase.
” Salaries have not been increase and yet, the level of hardship on us keep increasing on a daily basis. Its becoming more and more frustrating to be a Nigerian.
” It is this hardship that is causing insecurity across the country”, she added.
They called on the federal government not to remain insensitive to the plight of Nigerians.
