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How Electricity Tariff Was Hiked Three Times Under Buhari Government

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How Electricity Tariff Was Hiked Three Times Under Buhari Government

 

The Nigerian Electricity regulatory Commission (NERC) has confirmed that the electricity tariff has raised by 2 naira to four naira since January 1, 2021 to mirror increase in inflation and exchange rates.

The new increase are going to be the third time in five years under the administration of President Muhammadu Buhari.

According to a press release by the Assistant general manager (AGM), Government, External and industry Relations at NERC, Mr Michael Faloseyi, the Commission said aforesaid tariff increase for Bands D and E (Customers obtaining power below twelve hours daily) stay ‘frozen’, it but admitted that the tariff rates for even these categories of consumers were ‘adjusted’ upward.
“In compliance with the provisions of the electric Power Sector Reform Act (EPSRA) and the nation’s tariff methodology for biannual minor review, the rates for service bands A,B,C,D and E are adjusted by N2.00 to N4.00 per kilowatt hour (kWhr) to mirror the ‘partial’ impact of inflation and movement in exchange rates.”

“NERC conjointly same “Any client that has been compact by any rate will increase on the far side the higher than provision of the tariff order ought to report back to the Commission.”

 

Varied increment

The latest tariff hike for the DisCos reflect varied increment percentage from 25 per cent above, records show. as an example, customers of Ibadandiscocan payan average of N46.5 per kWh from January to June 2021, rising from N34.1 as of Dec 2020, its order signed by NERC Chairman showed. the rise for this disco is N12.4 or 25 per cent.

According to a revised Multi Year Tariff Order (MYTO) signed by the new Chairman of NERC, Engr. Sanusi Garba, on Dec30, 2020, and keen-sightedTuesday, the new tariff increase took impact on Jan1, 2021, and supersedes the previous Order NERC/2028/2020.

In the new revised Service based Tariff (SBT) Order NERC/225/2020, the commission aforementioned it thought-about the 14.9% rate of inflation rise in November 2020, exchange of N379.4/$1 as of Dec29, 2020, on the market generation capabilityUnited Statesrate of inflation of 1.22% and thecapital expenditure (CAPEX) of the powercompaniesto raise the tariff.

This is effective untilJune 2021 whilevalue|a price|a value} Reflective Tariff (CRT) expected to raise the new cost higher are going to be activated from June to Dec 2021, the NERC Order revealed.

Daily Trust had reported that in Dec, 2020, NERC notified that it had begun a review for one more tariff changethat has been completed and had taken impact from Jan1, 2021.

How FG approved 3 tariffs in 5 years

Daily Trust reports that this is the third tariff increase NERC has approved for the 11 Distribution Companies (DisCos) in five years. It had increased the Multi Year Tariff Order (MYTO) 2015 by what customers described as over 50 per cent on February 1, 2016.

The MYTO template for reviewing tariff increase or decrease ought to be reviewed twice a year and the result implemented every six months.

Although indices like inflation, foreign exchange rates, gas prices went up with a lower generation capacity, prompting a further increase by June 2016, NERC failed to implement about at least nine tariffs on biannual basis, which piled up until 2020.

In the quest to gradually increase tariff by what it calls Cost Reflective Tariff (CRT), NERC planned a tariff hike of the Service Based Tariff (SBT) in April but postponed it to July due to COVID-19 pandemic.

It approved the hike for the DisCos starting September 2020, but suspended it after severe outrages; the Commission amended it with discounts and reintroduced it on November 1, 2020 which makes it the second tariff hike since 2016.

Source: DAILYTRUST

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