FG Slashes Electricity Tariff By 50 Per cent

Channels Television  
Updated March 18, 2015

NERCThe Nigerian Electricity Regulatory Commission (NERC) has announced the immediate review of electricity tariffs by about 50 per cent.

The Chairman of the Commission, Dr. Sam Amadi, said the reduction, which takes effect from the end of March, follows the regulatory agency’s decision to remove collection losses from customer tariff under the multi-year tariff order.

“It is clear that removing the collection losses will lead to lower tariffs for consumers. The removal of collection losses from customer tariff has reduced tariff by more than 50 per cent in some places. Please note that the reduction does not affect the CBN facility and its repayment.

“Industrial and commercial consumers under the auspices of the Manufacturers Association of Nigeria (MAN) petitioned the commission, asking for a review of the MYTO 2.1 and requested drastic reduction of their tariff. They claimed that such astronomical increase in tariff would kill their business and lead to massive job losses.”, he said

Amadi argued that the Electric Power Sector Reform (EPSR) Act and the Business Rules of the Commission mandated the commission to review its decision.

He further noted that this new direction comes as part of the commencement of the Transitional Electricity Market (TEM). The TEM is built on bilateral trading between parties and is geared towards ensuring an efficient market where cost reflectivity will lead to more affordable electric services for consumers.

He said the new order now amended the MYTO 2.1 and had reduced the tariff to be paid by all class of consumers.

In the review of MYTO 2.1, he said the commission followed due process and the regulatory principles.
“NERC remains committed to the principle of cost-reflective pricing and to the development of an efficient and financially viable electricity market. These are important to support the investment that is needed to ensure the electricity supply industry meets the needs of the Nigerian economy.

“The decision to review tariff is completely compatible with the terms of the privatisation and has been reviewed with the Bureau for Public Enterprises (BPE). NERC and BPE are working together to advocate for series of fiscal policies that will foster easier access to investible capital to further increase capacity and enhance reliability in the sector,” it concluded.

The Commission further adds that from its consultation with various electricity consumer groups across the country, it established that the skyrocketing increase in the tariff was informed by huge aggregate technical, commercial and collection losses which are incurred by the electricity Distribution Companies (DISCOs) and are subsequently passed on to consumers.