The newly approved tariff is anticipated to lower subsidies for the 2024 fiscal year by roughly N1.14 trillion, according to the Nigerian Electricity Regulatory Commission (NERC).
NERC approved an increase in electricity tariffs for customers in the Band A classification on Wednesday.
The commission stated that customers in the classification who receive 20 hours of electricity per day will pay N225 per kilowatt (kW) beginning April 3 — up from N66.
Musliu Oseni, vice-chairman of NERC, disclosed this in a statement on Wednesday. He said that the new tariff would go a long way towards ensuring a reliable power supply to drive the country’s economy.
Oseni said:
“With the newly approved tariffs, subsidies for the 2024 fiscal year are expected to reduce by about NGN1.14 trillion in furtherance of the federal government’s realignment of the subsidy regime.”
According to Oseni, the federal government has indicated a shift in policy towards implementing a more targeted subsidy regime to mitigate the impact of changes in macroeconomic parameters.
“While largely protecting vulnerable customers and fostering investments targeted at providing efficient service delivery in the Nigerian Electricity Supply Industry (NESI).”
The vice-chairman added that the commission thoroughly reviewed the tariff applications submitted by the 11 electricity distribution companies (DisCos) by the procedures outlined in its regulations and business rules.
He stated that the review process was preceded by an analysis of the licences’ performance improvement plans, as well as a public hearing during which interested stakeholders and intervenors examined the public utilities’ rate filings.
“The overarching objective of the commission in the consideration of the tariff application is the creation of a financially sustainable electricity market providing adequate and reliable power supply to drive the Nigerian economy.”
“The commission, upon due consideration of the tariff applications, has approved revised rates affecting only customers classified under the Band Serv category which is about 15 per cent of the customer population.”
However, Oseni stated that empirical service data confirmed that this class of customers received a committed level of service.
He stated that under the revised tariff order issued by the NERC, DisCos were required to provide customers in the A and B service categories with a minimum average supply of 20 hours per day over one week.
“All other customers under the B to E-service category, representing 85 per cent of the customer’s population, will not be affected by the current review of end-user tariffs.”
“All DisCos have been provided with mandatory targets for investments and migration of more customers to B.”
“The commission has established a robust monitoring framework leveraging on technology to ensure that the public has visibility of the service covenant with their service providers.”
He also stated that an enforcement and compensation mechanism had been established in the event of a service failure and that policymakers would work together to provide adequate and reliable electricity to all citizens.
Oseni stated that the commission would work closely with state governments to deliver on the benefits of the Electricity Act 2023.