Electricity: NERC Says Increase In Tariff Imminent

By Tosin Olatokunbo

The Nigerian Electricity Regulatory Commission, NERC has put electricity consumers in the country on notice of another imminent increase in tariff. The government agency in charge of regulating electricity sales and consumption, said on Monday that it was in the process of concluding the Extraordinary Tariff Review, ETR for the country’s 11 electricity distribution companies, Discos.

The notice comes on the crest of a report by the World Bank that over 78 per cent of people living in the country have less than 12 hours access to electricity daily. The federal government has faulted the report.

NERC said the review, which is a minor one, began in the first quarter of 2020 and has remained inconclusive.

According to the notice issued by Sanusi Garba the Chairman of the Commission, the agency expressed its readiness to commence the processes for a minor review of the tariff in July, based on changes in inflation, foreign exchange, gas prices, and available generation capacity, among other factors.

The notice reads “Pursuant to the provisions of the Electric Power Sector Reform Act (EPSRA), the Nigerian Electricity Regulatory Commission (“NERC” or “the Commission”) adopted the Multi-Year Tariff Order (MYTO) Methodology in setting out the basis and procedures for reviewing electricity tariffs in Nigeria. The MYTO provides for Minor Reviews (every 6 Months), Major Reviews (every 5 years), and Extraordinary Tariff Reviews in instances where industry parameters have changed from those used in the operating tariffs to such an extent that a review is urgently required to maintain the viability of the industry.

Further to the above, the Commission held series of Public Hearings and stakeholder consultations in the first quarter of 2020 on the Extraordinary Tariff Review Applications of the eleven (11) electricity distribution companies (“DisCos”) to consider their respective 5-year Performance Improvement Plans (“PIPs”). However, the evaluation of the DisCos’ requests for review of the Capital Expenditure (“CAPEX”) proposed in their PIPs could not be concluded for the consideration of the Commission during the Minor Reviews undertaken in 2020.

“Specifically, Section 21 of the MYTO – 2020 Order provides for consideration of DisCos’ CAPEX application upon further scrutiny and evaluation of the investment proposals. Accordingly, this notice is issued to inform the general public and industry stakeholders of the Commission’s intention to conclude the Extraordinary Tariff Review process for the eleven DisCos;
“Commence the processes for the July 2021 Minor Review of MYTO – 2020 to consider changes in inflation, foreign exchange, gas prices, available generation capacity, and CAPEX required to evacuate and distribute the said available generation capacity in accordance with EPSRA and other extant industry rules.

This notice is hereby issued in compliance with the provisions of EPSRA, the Business Rules of the Commission and the Regulations on Procedures for Electricity Tariff Reviews in the Nigerian Electricity Supply Industry to solicit for comments from the general public on the proposed reviews,” NERC said.

Last week, the World Bank in a report indicated that 78 per cent of power consumers in Nigeria get less than 12 hours of daily electricity supply. The government in a statement issued by the Special Adviser to the President on Infrastructure, Ahmad Rufai Zakari, in Abuja, debunked the claims, saying that the report cannot stand in the face of facts.

Zakari while responding to the Power Sector Recovery Programme Opinion Research Fact Sheet released by the World Bank on Friday, said it is improper to say 78 per cent of Nigerians have less than 12 hours daily access, citing empirical evidence from the Nigerian Electricity Regulatory Commission, NERC which he said showed that only 55 per cent of citizens connected to the grid are in tariff bands D and E which are less than 12 hours supply.

According to him, “it is inaccurate to make a blanket statement that 78% of Nigerians have less than 12 hours daily access. The data from NERC is that 55% of citizens connected to the grid are in tariff bands D and E which are less than 12 hours supply.

”Those citizens are being fully subsidized to pre-September 2020 tariffs until DIsCOs are able to improve supply. “There is a N120 billion CAPEX fund from CBN for DIsCOs to improve infrastructure for these tariff classes similar to the metering program that is ongoing.”

Zakari also spoke on the aspect of metering electricity consumers in the country after the Brenton Wood based Bank said 58 percent of electricity consumers in the country are being cheated by Discos because they have no meters to determine their electricity consumption

The Presidential aide said, “It is unclear who did this survey and what the timeframe is. All citizens that have gotten free meters report they are happy about the reform trajectory. To date, more than 600k meters have been delivered to DISCOs out of the 1 million in phase 0 with installation ongoing. Meters are sourced locally and are creating jobs in installation and manufacturing/assembly.

He further stated that the Service Based Tariff ensures that citizens pay more only when and if they are receiving high quality of service. “All consumers have been communicated their bands and bands are published during billing. It is inconceivable that anyone would imply that 4 out of 5 Nigerians are not intelligent enough to understand tariff classes and what they are paying for.”