DisCos explain power tariff increments as NERC plans stakeholder engagements, awaits Tinubu’s approval

*The Nigerian Electricity Regulatory Commission discloses the industry regulator is expecting President Bola Ahmed Tinubu’s approval before announcing a new tariffs regime to stakeholders and other consumers in the country

Isola Moses | ConsumerConnect

The proposed increases in electricity tariffs will happen; “if not the government will have to pay for the shortfall,” a competent source at the Nigerian Electricity Regulatory Commission’s (NERC) has disclosed.

ConsumerConnect reports the NERC’s review of the Multi-Year Tariff Order (MYTO), being applied twice a year in the power sector, is expected to result in rate increases in view of the recent floating of the Naira, Nigeria’s national currency.

The source at the regulatory Commission, who preferred anonymity Wednesday, June 28 said the proposed rates  review had been concluded while the result is due to be forwarded to President Bola Ahmed Tinubu for approval.

Earlier, several Electricity Distribution Companies (DisCos), through messages, had notified their customers of the new price hike regime of between 30 and 40 percent increases in tariff rates.

The power operators’ price hike  notification messages had created undue anxiety in the economy.

But as reactions to the messages, several analysts, organisations, businesses, and electricity consumers have frowned on the move to increase power tariffs by 40 percent, especially against the backdrop of the recent removal of fuel subsidy by the Federal Government and its wide-ranging implications on consumer spending and standard of living.

Yet, both the power regulatory Commission and the DisCos, earlier this week, later backtracked on the move, saying the proposal was yet to receive the approval of the President.

However, the NERC source also told Vanguard, that “everything is ready. By Friday this week (June 29), we will know if this increase will happen on July 1 or August 1, as some people have suggested.”

The official further explained: “The truth is that the increase will happen, if not the government will have to pay for the shortfall.

“I don’t think there is a budget for it and without the increase, the industry will struggle to survive.”

Regulator plans stakeholders’ meetings over electricity tariff increments

In providing more insight into the activation of the new tariff hike regime, the source further revealed that a stakeholders’ meeting involving the NERC, power operators and electricity consumers had been scheduled for next Monday and Tuesday (in July),  when all issues arising from the tariff increments would be discussed.

It was also learnt that Olu Verheijen, Special Adviser to President Tinubu on Energy, would likely lead the Federal Government’s decision on the electricity tariff review, and other reforms in the power  sector of the Nigerian economy.

Verheijen, last Friday, met with top government officials at the Federal Ministry of Power, in Abuja, when the Presidential aide reportedly explained her vision for the power sector.

On proposed stakeholders’ engagements over price hikes

In view of the NERC’s move to engage major industry stakeholders on the proposed electricity tariff increases, some consumers said they would attend the planned stakeholders’ meeting expected to throw up issues.

Such burning issues include the operators’ apparent rising cost of operations, inflation and recent unification of the Foreign Exchange (Forex) rate.

Reactions to application of new electricity rates

In regard to the upward tariff review, and what the consumers stand to gain in the process, the Electricity Distribution Companies have said the expected upward tariff review would encourage investments, leading to improved power supply to consumers, according to report.

Likewise, the Manufacturers Association of Nigeria (MAN) also, reportedly affirmed that the implementation of the country’s Electricity Act would also be enhanced via the new tariffs.

A MAN’s position paper stated: “As an advocacy Association, MAN has always pushed for the need to charge cost-reflective electricity tariff to avoid extortion of our members.

“Fortunately, it is of great delight that this new Act fits like a glove as it will help actualise a cost-reflective tariff considering the healthy price competition it will bring between the states and private investors.”

However, reactions of the forthcoming tariff increments are a different ball game with consumers.

Mr. Kunle Olubiyo, President of the Nigeria Consumer Protection Network, noted that much value has not been given to consumers despite several past electricity tariff reviews.

Olubiyo, in a note, was quoted to have stressed that more investment should be channelled into the capacity expansion of critical power grid infrastructure and network improvements.

According  to him, this is essential to upscale efficient service delivery, quality of supply and customer satisfaction in the post-privatised Nigerian power sector.

“(Federal) Government should address matters relating to domestic gas obligation, appropriate gas pricing and gas to the domestic market should be sold in local currency (Naira) for use by gas to power generation power plants.

“Government should provide tax incentives, fiscal and non-fiscal incentives and access to long-term low-interest single digits credit facilities to indigenous meters assembling plants/local meters manufacturers in order to strengthen their production capacity,” Olubiyo stated.

The consumer advocate further said: “End users of electricity in Nigeria should be given the opportunity to buy pre-paid meters off the shelves.

“Conversion of the post-paid meters used by maximum demand metered customers who are bulk users into pre paid maximum demand meters in order to enhance energy accountability and customer-centric, customers’ satisfaction & value for money.”

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