The Nigerian Electricity Regulatory Commission (NERC) announced on Wednesday that the federal government will continue to cover the deficit in electricity tariffs until the economic situation improves.
Chairman of NERC, Mr. Sanusi Garba, revealed during a press engagement in Abuja that a new Multi-Year Tariff Order (MYTO) 2024 has been issued to each electricity Distribution Company (Disco). The government is prepared to offset any shortfall resulting from the new tariff.
The orders issued to the Discos highlighted discrepancies between their proposed tariffs and NERC’s approved rates. For instance, the Ibadan Disco (IBEDC) set its tariff at N118, but NERC approved N62.50, with the government covering the difference. Similarly, Abuja Disco’s approved tariff was N63.24, compared to the requested N151.07.
In the case of Benin Disco, a requested tariff of N277 was reduced to N60.10 by NERC, acknowledging a cost-reflective amount of N126. The government is now responsible for the deficit of N65.90 for every kilowatt hour (Kwh) consumed by customers under that franchise.
The court had earlier indicated that if the current power subsidy regime continues in 2024, it could reach N1.65 trillion by the year-end. Although rumors circulated about a tariff increase on January 1, 2024, NERC denied such decisions, emphasizing that tariffs would not rise.
Garba, addressing the press, stated that the federal government will subsidize electricity to alleviate financial burdens on Nigerians amid economic challenges. He clarified that the new tariff represents the amount Discos are allowed to charge based on government policy while incorporating provisions to ensure payment obligations by the Discos.
The chairman highlighted the Electricity Act signed by President Bola Tinubu in 2023, providing states with the opportunity to make laws and manage electricity provision in their areas. He affirmed the commitment to collaborate with states in utilizing existing public utilities for their intended purposes.
Discussing metering challenges, Garba acknowledged that Discos faced financial constraints, impacting the rate of metering. To address this, NERC created a framework allowing Discos to allocate funds for metering from market revenues. The chairman emphasized that customers should use communication channels, including mobile apps and forum offices, for outage reporting and complaint resolution.
Garba clarified that no Disco has the authority to force customers to purchase poles and cables, and there are frameworks for customers to retrieve the amortized value of such facilities. He noted that, based on the multi-year tariff regime, rates are supposed to be reviewed every six months, with NERC now having sole regulatory power following the expiration of the agreement between Discos and the Bureau of Public Enterprises (BPE).
After consultations, the tariff order was issued, considering different operating parameters for each Disco.