Victor EzejaThe Nigerian Electricity Regulatory Commission (NERC) says the new increase of electricity tariff will reduce subsidy for electricity generation by 40 per cent while the Federal Government would still retain about 50 per cent.
Executive Vice Chairman of NERC, Musiliu Oseni, who made this known during ministerial press briefing in Abuja on Friday, said prior to the new rate hike, the government had been paying subsidy which covered about 90 per cent of total power generation costs.
Prime Business Africa reports that the Federal Government through the NERC had on Wednesday announced an increase of electricity tariff for band A customers from ₦66 to ₦255 per kilowatt hour (kwh) with effect from April 2024.
This new development which is to implement the 2024 multi-year tariff order (MYTO), has seen the current tariffs rise by almost 250 per cent.
The Commission said only 15 per cent of electricity consumers will be affected by the rate hike which means that about two million households out of the 13 million electricity consumers in Nigeria will bear the brunt of the increase while about 11 million representing 85 per cent spread across other bands – B to E will maintain old tariff rates.
Band A power users are those who get up to 20 hours supply of electricity daily and paid about N68/kWh before the implementation of this latest order by the Federal Government through NERC.
The tariff rate hike has generated reactions from different quarters. Labour unions such as the Nigerian Labour Congress (NLC), Trade Union Congress (TUC), and Organised Private Sector (OPS) have kicked against it, saying the government is being insensitive to the plight of the people, adding that it would impose more suffering on the ordinary people. OPS said the hike would lead to job losses, higher cost of operations, and inflation, among other challenges.
Speaking during the briefing on Friday, the NERC boss said the government spends billions of Nair every year on electricity subsidy.
According to him, the total generate cost as indicated in the invoice issued to DisCos for January was ₦240 billion but they were only mandated to pay $24 billion which is 10 per cent, while the government bore 90 per cent.
“So, that tells you that 90 percent of the generation cost was being borne by the government. Now with the review (MYTO), that means that about 50 per cent of the generation cost will now be subsidised by the government. “So, that tells you that there is a reduction of about 40 per cent by reviewing the rates to the elites (those in band A).
“That means that 15 per cent of Nigerian electricity customers are charged for 40 per cent of the generation cost.”
He said the proposed phased removal of electricity subsidy is pro-poor.
He said the Commission remains committed to enforcing compliance with standard practices, especially the DisCos.
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Prime Business Africa recalls that NERC on Friday, slammed a fine of ₦200 million on the Abuja Electricity Distribution Company (AEDC) for non-compliance with the Supplementary Order to the April 2024 Multi-Year Tariff Order.
It said Abuja DisCo erroneously applied the new rate of N255kwh in billing customers across all bands instead of only Band A.
The Commission directed the DisCo to refund all customers that were wrongly billed their money within one week.
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
