Electricity: Nigerians to pay more as FG introduces new tariff

Nigerians should brace up for the challenges ahead as a report shows that the Federal Government (FG) through the Nigerian Electricity Regulatory Commission (NERC) has increased the tariff payable by power consumers across the country. 

According to various documents obtained from the NERC on Wednesday in Abuja, beginning from 2020, power consumers in Nigeria will have to pay an additional sum of between N8 and N14 for every kilowatt-hour of energy provided by their respective distribution companies (DisCos). 

The Details: Information contained in the NERC documents shows that the tariff increase for each DisCo differs. NERC also revealed the actual cost-reflective tariff for each of the 11 power distribution companies operating in Nigeria.  

The Federal Government of Nigeria reportedly disclosed the cost-reflective tariff of each of the Discos in separate documents for each distributor in a regulatory instrument cited as ‘The 2016-2018 Minor Review of Multi-Year Tariff Order 2015 and Minimum Remittance Order for the Year 2019’. 

Tariff increase across zones: It was learnt that the difference between what Abuja DisCo’s (AEDC) customers pay currently and what will be paid from next year is an increase of N9.8/kWh. 

Similarly, for Benin DisCo (BEDC), the difference between what is currently being paid and the new tariff from next year is an increase of N9.75/kWh. 

For Eko DisCo, the end-user allowed tariff from 2017 to 2019 per kWh was N28.3 in each of the years, while those of 2020 and 2021 were put at N36.8 and N39.2. The difference between what Eko DisCo’s customers pay currently and what they will pay from next year is an increase of N8.5/kWh. 

It was learnt that customers under Enugu Disco will get a tariff increase of N10.6/kWh from next year. According to the Commission, the allowed end-user tariffs for Enugu Disco for 2019, 2020 and 2021 per kWh are N35.3, N45.9 and N41.6, respectively. 

For residents who are served by Ibadan DisCo, the end-user allowed tariffs for 2019, 2020 and 2021 per kWh are N30.6, N39.7 and N44.2, respectively. This implies that by next year, power consumers who get supply from Ibadan DisCo will witness an increase of N9.1/kWh in their tariff. 

FG Power storage and distribution

In Ikeja DisCo’s franchise areas, customers will have to pay additional N8.2/kWh from next year. This is because the end-user allowed tariffs in the order from NERC put the tariffs for 2019, 2020 and 2021 per kWh at N27.3, N35.5 and N37.1 respectively. 

Also, in Jos Disco, tariff increases by N10.1/kWh, as consumers under this Disco will have to pay N43.9/kWh by 2020, as against the current N33.8/kWh.  

Kaduna DisCo’s power consumers will pay an increase of N9/kWh. The end-user allowed tariffs for 2019, 2020 and 2019 per kWh for Kaduna DisCo, as represented by NERC, are N30.3, N39.3 and N41.7, respectively. 

Also, for Kano DisCo, NERC increased the end-user allowed tariffs from N30.1/kWh in 2019 to N44.7/kWh in 2020 and N41.8/kWh in 2021. This implies that residents who are served by this DisCo will witness an increase of N14.6/kWh in the tariff they pay for electricity.

Recent Development: The latest tariff may not come as a surprise just as the government had clearly been premediating the plans to increase electricity tariffs. Nairametrics in an earlier publication in June reported that electricity tariff might rise. The Managing Director of the Transmission Company of Nigeria (TCN), Dr. Usman Gur Mohammed, however, said the Federal Government was ready to inject $1.7 billion into the DisCos.  

According to Dr Usman, the private sector investors would not raise loans from commercial banks. As a result, they would need to earn their returns on investment by hiking tariffs. 

“Private investors would not raise their loans from commercial banks. This money has a repayment period of about 20 years and a moratorium period of about five years. So, they (private investors) should bring the same type of money.

“Tariff may go up as a result of the fact that there is going to be repayment of those capital and also payment of interest.” 

Source: Nairametrics

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