The Nigerian Electricity Regulatory Commission (NERC) has officially dismissed the widespread rumours of an increase in electricity tariffs effective today, January 1st, 2024.
Recall that reports emerged yesterday, that Nigeria’s electricity distribution companies (DisCos) are reportedly planning to hike electricity tariffs nationwide with effect from today, January 1.
According to the report, “All has been perfected for the new tariff to take effect from the first of January, 2024”.
Spokesperson of NERC, Usman Abba, categorically denied any approval for such a tariff hike, emphasising that the electricity tariff order currently in effect remains unchanged. “NERC has not issued any order to DisCos concerning tariff hike; we usually have meetings with all stakeholders before any proposed increase, but we’ve not had any meeting with any DisCos concerning price increase”, he stated.
NERC’s quarterly reports indicated that electricity subsidies gulped N204.59 billion in the third quarter of 2023 and N135.23 billion in Q2, which is substantially higher than the N36.02 billion in Q1 2023.
“The Multi-Year Tariff Order (MYTO) in 2022 was intended to gradually eliminate the subsidy. However, challenges arose with the freeze on tariff reviews in July 2023, disrupting the progress made in phasing out the subsidy,” Adegbemele said.
Recall that on 25 June 2023, Abuja DisCo, in a note to their customers, had informed of an increase in electricity tariff effective 1 July.
The DisCo’s statement suggested that the tariff increase is a response to the floating of the naira and aims to ensure that the electricity industry remains financially viable and sustainable in the face of currency challenges. “Under the MYTO 2022 guidelines, the previously set exchange rate of N441/1 dollar may now be revised to approximately N750/1 dollar, impacting the tariffs associated with your electricity consumption”, Abuja DisCo said.
However, on June 29 2023, the Abuja DisCo informed its customers to disregard the publication saying it was yet to get approval to commence the tariff hike.
The MYTO is a framework NERC uses to determine electricity tariffs in Nigeria. It provides guidelines for a structured approach to calculating and reviewing tariffs to ensure transparency, cost recovery, and sustainability in the power sector. It provides a 15-year tariff path for the Nigerian electricity industry and undergoes regular reviews to account for changes in factors such as inflation, exchange rate, gas price and generation capacity.
In 2015, the average tariff across DisCos and classes of end-users was N25 kilowatt. And on September 1, 2020, the average tariff was reviewed upward to N60 per kilowatt and later went up to N64 in 2022.
