The Minister of Power, Engr. Sale Mamman has confirmed impending increase in electricity tariff but dismissed rumours of a major hike.
Clarifying in a statement that there is no plan to “significantly raise tariff”, the minister said instead of significant hike in electricity tariff, Nigerians should expect an increase efficiency in the sector to reduce tariffs while managing headwinds from foreign exchange and inflation.
The Nigerian Electricity Regulatory Commission (NERC) had in a notice informed the general public and industry stakeholders of the Commission’s intention to: “Conclude the Extraordinary Tariff Review process for the eleven DisCos; And Commence the processes for the July 2021 Minor Review of Multi-Year Tariff Order (MYTO) – 2020 to consider changes in inflation, foreign exchange, gas prices, available generation capacity, and Capital Expenditure required to evacuate and distribute the said available generation capacity in accordance with EPSRA and other extant industry rules.”
But the Minister said the clarification became necessary due to reports of possible major increase in the price of electricity that has dominated the public space.
Mamman explained that the order issued by NERC on the 26th of April 2021 titled “Notice of Minor and Extraordinary Review of Tariffs for Electricity Transmission and Distribution Companies” was a routine procedure.
He said the review planned by NERC is in accordance with Section 76 of the Electric Power Sector Reform Act of 2005.
According to him, “the tariff for customers on service bands D & E (customers being served less than an average of 12hrs of supply per day over a period of one month) remains subsidized in line with the policy direction of the Federal Government”.
The minister said Section 76 of the Electric Power Sector Reform Act of 2005 provides clear guidelines for the periodic review of tariff (based on market data and submissions from licensees).
The guidelines include the provision that the Commission shall give notice of activities related to tariff “in the Official Gazette, and in one or more newspapers”.
“The Multi-Year Tariff Order (MYTO) per NERCs regulation obtains inputs from operators in the market every 6 months to perform minor reviews and a major review is required every 5 years. Thus, as in January a minor review will occur in June. Given the timing for the Extraordinary review has also elapsed, a review will occur for consideration in January 2021″, the statement said.
Mamman said the Buhari administration remained faithful to the adopted resolutions from the Joint FGN-NLC/TUC Technical Committee on Electricity Tariffs which makes recommended for “NERC to conduct an extraordinary review of the MYTO to further review factors and align them with current evolving realities.”
The reason this recommendation was posited by the Committee was to ensure that efficiencies could be derived from an extraordinary review to further reduce tariff.
He said government was committed to increasing supplied energy to the grid through rapid expansion of infrastructure through the various facilities for the sector either to the DISCOS under strict terms or to the Transmission Company of Nigeria.
“Furthermore, the National Mass Metering Program is on course to reduce losses. To date more than 500k meters have been delivered to DISCOs in phase 0 of the program in 5 months (this exceeds the progress done for the entire MAP scheme). We will eliminate the metering gap during the life of the administration,” the statement said.
It said the administration was not unaware of the challenges that Nigerians face which is why government has continued to subsidise the band D and E consumers to pre-September 2020 rates (55% of grid connected customers).
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