Nigeria Reduces Electricity Tariff by Fifty Percent

Nigerian government on Tuesday announced a reduction in electricity tariffs by 50 per cent. It explained that the reduction which came barely two months after it cut the pump price of petrol by N10 followed a series of complaints by electricity consumers.

The government through the Nigerian Electricity Regulatory Commission added that it took the decision after it removed the collection loss component of the Multi Year Tariff Order 2.1 of the affected Discos. The nation has 11 Discos that distribute power to consumers.

NERC Chairman, Dr. Sam Amadi, said the addition of the Aggregate Technical, Commercial and Collection losses to the reviewed tariff that was implemented on January 1, 2015 was responsible for the skyrocketed tariff. According to him, the addition was done after the regulatory commission conducted a fact-finding tour of the Discos and noted that it was aimed at ensuring a cost reflective tariff by passing the bulk to ‘‘paying’’ consumers for losses incurred from ‘‘non-paying’’ consumers.

He said although the increment in residential tariff was pending till June 2015, the total removal of the collection loss applied to all consumer categories, including industrial and commercial consumers. Energy charges vary from one Disco to another. In Abuja for instance, residential consumers, based on the MYTO 2.1, pay N4 per kilowatt hour, while the amount charged commercial customers, depending on their respective category, range from N23.32 to N37.68 per KWH. Fixed charges for most residential consumers is between N650 and N750 while energy charge has an average of about N4 for every KWH.

With the new directive, it therefore means that the energy charge, which forms the larger part of the tariff paid by customers when computed by Discos, will be reduced by half. Amadi said the commission listened to consumers and took full account of the impact of high tariff paid by consumers and the   economy and therefore reviewed the basis of the MYTO 2.1 assumptions. He explained that after the review, it was agreed that it was inappropriate to transfer the collection losses that were controllable by Discos to consumers.

The NERC chairman said, “It is the responsibility of the Discos to collect their revenue from their customers. Failure to do so should not be a penalty to customers who pay their bills. It is clear that removing the collection losses will lead to lower tariffs for consumers. He added that, “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 Central Bank of Nigeria facility and its repayment.” Since January 1, 2015 when NERC approved the MYTO 2.1, there had been several complaints against the increase in tariff of different consumer classes.