FG Suspends Electricity Tariff Increase, Opts To Subsidize Tariff

The Federal Government has halted the implementation of the cost reflective tariff by the eleven electricity Distribution Companies (DisCos), with the assurance of subsidizing the tariff to the tune of N1.6 trillion in 2024.

The Nigerian Electricity Regulatory Commission (NERC), had based on presentations made by the DisCos as well as in consultations with electricity consumers nationwide, worked out a new Multi-Year Tariff Order (MYTO) which ought to have taken effect begining January 1, 2024.

But the NERC Chairman, Engr. Sanusi Garba while briefing Journalist, disclosed that the new MYTO is being put on hold to allow electricity consumers to continue enjoyment of the old tariff as the federal government has opted to continue payment of electricity subsidy.

He recalled that following the presentations and for a new tariff made by eleven DisCos, the Commission took into consideration the current inflationary trend, cost of operation and current cost of living before arriving at the new Order.

In respect of the Abuja Electricity Distribution Company (AEDC), NERC’s Multi-Year Tariff Order (“MYTO”) 2024 targets at mainly ensuring that prices charged by AEDC are fair to customers and are sufficient to allow AEDC to fully recover the efficient cost of operation, including a reasonable return on the capital invested in the business in accordance with section 116 of the Electricity Act 2023 (“EA”).

Others include resetting industry parameters and performance obligations to incentivise improvement of efficiency and service experience of electricity consumers and ensuring sustained improvement in meter deployment and quality of supply in line with AEDC’s CAPEX proposal and service improvement commitment.

Also, the Order targets at ensure that tariffs payable by AEDC’s customers are commensurate and aligned with the quality and availability of power supply committed to customer clusters by AEDC and provide a framework for the settlement of imbalances between TCN and AEDC on delivery and off-take of available energy in accordance with the Market Rules, Vesting Contracts and other industry documents.