NERC approves another increase in electricity tariff

The Nigerian Electricity Regulatory Commission (NERC) has approved an increase in electricity tariff across the country.

According to a directive issued on December 31, 2020, and signed by Sanusi Garba, NERC chairman, the new tariff will take effect from January 1.

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.

The NERC said 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 commission said.

“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.

“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.

<p class="has-drop-cap has-vivid-red-color has-text-color" value="<amp-fit-text layout="fixed-height" min-font-size="6" max-font-size="72" height="80">“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.”“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.”

In November 2020, the electricity distribution companies (DisCos) began implementation of a service-based reflective tariff (SRT) structure nationwide after receiving approval from President Muhammadu Buhari.

Electricity Tariff: Energy Bill Soars by 100% at Ikeja Distribution Company.

Electricity Tariff: DISCOs to refund overcharged households – Presidency
…FG to use NESI’s VAT proceeds to reduce tariff hike by 31%

The Presidency on Monday said it will work out modalities to ensure that customers overcharged by the Eleven Electricity Distribution Companies, DISCOs, during the recent hike in tariff get their refunds.

This came even as the Special Adviser to the Nigerian president, on Infrastructure, Ahmad Rufai Zakari, disclosed that the DISCOs will distribute six million prepaid meters to Nigerian households.

Zakari made this known shortly after a negotiation meeting between the Federal Government and Labour Union.

It would be recalled that, the Nigerian Electricity Regulatory Commission (NERC) earlier in September, increased electricity tariff from N30.23 per kilowatt-hour to N62.33 Per kwh.

Following the tariff increment, five distinctive bands (A-E) were created to reflect the various service levels and minimum hours of power supply.

For instance, customers in “Band A” are to enjoy a daily minimum supply of 20 hours, those in “Band B” minimum of 16 hours, “Band C” minimum of 12 hours, “Band D” minimum of 8 hours, while those in “Band E” are expected to enjoy a minimum daily supply of 4 hours.

However, Zakari stated that, “The implementation of the above tariff reliefs will be executed within this week as the suspension of the Service-Based Tariff is removed, the distribution of six million free meters to Nigerians and refunds for any customers overcharged by the DIsCOs will also be implemented.

“We completed our work with Labour on electricity tariffs. The federal government will use Value Added Tax, VAT proceeds from the Nigerian Electricity Supply Industry, NESI, to reduce the September increases by 10 per cent to 31 per cent for bands A to C. Band D and will remain frozen.

“I thank the federal government for allowing me to serve as Secretary of the joint committee. Creative solutions to find incremental relief for Nigerians at this difficult time is great. The Committee’s work is extended for two months. Thanks to the Nigerian Labour Congress, NLC and the Trade Union Congress, TUC, for the constructive partnership,” he added.