Why FG approved 300% electricity tariff hike from N68/KwH to N225

It quoted people in the presidency with knowledge of the matter saying this was in a bid to attract new investment and slash about $2.3bn spent to cap tariffs (subsidies).

Why FG approved 300% electricity tariff hike from N68/KwH to N225

However, it will be for urban consumers, also known as Band A consumers in the country.

Bloomberg had on Tuesday reported that power companies will be allowed to raise electricity prices to N200 ($0.15) per kilowatt-hour from N68 for urban consumers.

It quoted people in the presidency with knowledge of the matter saying this was in a bid to attract new investment and slash about $2.3bn spent to cap tariffs (subsidies).

According to the news agency, “Nigerians will now have to pay $2.42 per one million British thermal units from the previous rate of $2.18 MMBtu.”

“Stop buying transformers, poles for Discos”, NERC warns electricity consumers

The Vice Chairman and CEO of NERC, Musiliu Oseni, made this announcement in Abuja Wednesday.

Accordingly, power distribution companies, DisCos, are allowed to raise electricity tariff to N225 ($0.15) per kilowatt-hour from April 1.

Also, Oseni clarified that the rate increase will only affect 15 percent of the electricity customers in the country.

Oseni also revealed that the 15 percent customers consume 40 percent of the nation’s electricity.

NERC Service-Based Tariff, SBT, scheme classifies consumers based on the number of hours of electricity supply per day.

SBT, introduced on the 1st of November 2020, classifies consumers into Bands A to E as follows:

  • Band A: Minimum of 20 Hours
  • Band B: Minimum of 16 Hours
  • Band C: Minimum of 12 Hours
  • Band D: Minimum of 8 Hours
  • Band E: Minimum of 4 Hours

The increase follows Monday’s announcement by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) of an increase in the price of natural gas to power.

Band A

The Nigerian Electricity Regulatory Commission (NERC) says the increase in tariff will only affect customers enjoying 20 hour power supply across the country.

The commission said that other customers in Bands B, C and D are not affected by the increase

Mr Musliu Oseni, Vice Chairman, Nigerian Electricity Regulatory Commission (NERC) said this at a press briefing in Abuja on Wednesday.

According to him, the commission has approved the increase in electricity tariff paid by Band A customers from N68/KWh to N225KWh adding that the increase will not affect customers on bands B and C.

Oseni said that the increase only affect about 15 per cent electricity consumers that have been proven to enjoy 20 hours power supply daily.

He said that other electricity customers not affected by the rate review would not be neglected as they would still continue to get service.

The vice chairman said that the commission had also downgraded some customers on the Band A to Band B due to the non-fulfillment of the required hours of electricity provided by the electricity distribution company.

“We currently have over 800 feeders that are categorised as Band A, but it will now be reduced to under 500. This means that 17 per cent of the feeder now qualifies as Band A.

“The commission using technology discovered that many of the feeders that the Electricity Distribution Companies (DisCos) currently brandish as Band A are not meeting the required service and as such.

“The feeders were ordered to be downgraded immediately as a way of protecting consumers,” he said.

Oseni said that customers hitherto classified as Band A customers would not be affected by the rate review.

He said that as part of enforcement mechanisms  to ensure that  areas affected by the review get the 20 hours supply,  DisCos have been mandated to set up rapid response teams in locations where the feeders are located.

“This is to ensure that the customers can have access to the DisCos.

“They have also been mandated to publish the contact of the rapid response team where the customers are located.

“Failure to meet the commitment for seven consecutive days, the feeder will be downgraded immediately to the service level the DisCos is able to provide electricity to the feeder,” he said.

Oseni said where a DisCo  failed to meet the commitment for two days by the third day at 10am, the company must publish an explanation also via bulk SMS contacting the affected consumers on the feeder.

“They should explain why they could not meet the service for the two days and  also submit the explanation to the commission,” he said.