The Nigerian Electricity Regulatory Commission (NERC) announced the Federal Government’s approval of an upward review in electricity tariffs.
NERC Chairman Sanusi Garba revealed in Abuja that the government is expected to spend between N120 billion to N130 billion monthly (N1.6 trillion) to subsidize electricity in the ongoing year.
Garba clarified that the Multi Year Tariff Order (MYTO) became effective from January 1, impacting different customer bands under various Electricity Distribution Companies (DisCos).
The non-maximum demand (MD) customers of the Abuja Electricity Distribution Company (AEDC) band will maintain the N68.20 per kilowatt tariff, while the cost reflective tariff for the same category increased from N88.47 in 2023 to N124.42 this year, with a government subsidy of N35.95 per kilowatt.
Similarly, non-maximum demand (MD) customers under the Eko Electricity Distribution Company (EKEDC) band will see no change in the N67.48 per kilowatt tariff from the previous year.
However, the cost reflective tariff for this category rose from N89.03 to N114.84, reflecting a government subsidy of N25.81 per kilowatt.
Garba emphasized that the cost of electricity varies across DisCos due to economic peculiarities, with the commission issuing a tariff order specifying the charges DisCos should apply.
He highlighted the government’s decision to continue subsidizing electricity temporarily in response to economic challenges.
Additionally, NERC has established a Meter Acquisition Fund (MAF) from electricity market revenue to ensure funding for metering.
Garba noted that this fund would serve as a guarantee for lenders providing financing for metering projects, addressing the challenge of obtaining capital from banks for this long-term initiative.
In a move to enhance efficiency, Garba stated that DisCos are required to unbundle their subsidiaries, with no state permitted to manage distribution in more than one state.
States such as Ondo, Ekiti, Edo, Lagos, Enugu, and Anambra have enacted their Electricity Acts, while others, including Lagos, Edo, and Kaduna, are making progress in this regard.
Garba revealed a deadline for the bank managing Kaduna Electricity Distribution Company to divest, as power distribution is not their core business.
The commission has intervened by removing the board and management of Kaduna DisCo after the deadline elapsed. Core investors represented by Afrexim and Fidelity are urged to divest within the stipulated timeframe.
This comprehensive approach aims to address subsidy challenges, promote metering, and streamline the distribution sector for improved efficiency.
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