“Only the 17 percent feeders and less than 15 percent customers will be affected by any rate increase that the Commission will ever approve”- NERC
The Federal Government has explained that the current competitive demand for gas and the exchange rate hiccups compelled it to hiked tariff for electricity consumers on band A category with guarantee of at least 20 hours per day electricity supply by the power Distribution Companies (DisCos).
It also explained that about 2500 DisCos feeders on band A were downgraded because of failure of the DisCos to deliver at least 20 hours electricity supplies to consumers on band A as stipulated.
Nigerian Electricity Regulatory Commission (NERC) gave the explanations Wednesday just as it announced hike of tariff payable only by consumers on band A who are expected to receive electricity supplies up to at least 20 hours daily.
Briefing Journalists on the developments in Nigeria Electricity Supply Industry (NESI), the Vice Chairman of NERC, Dr. Musiliu O. Oseni, announced that effective today, electricity consumers on band A will be paying N225 per Kilowatt/hr, about three times of the initial tariff.
He recalled that in the electricity sector, there were some improvement in service delivery in December, 2023 and in January, 2024 there were some challenges.
According to him, “One of the reasons for that challenges has to with payments because the tariff is frozen at the rate obtainable as at December, 2022. The payments to the generation companies has significantly gone down relative to their cost of operation.
“As you’re aware that we have about 75 percent of our generation coming from thermal generation companies that are making use of gas, that is gas dependent generators. We have about 35 percent coming from the hydro, making use of God given water.
“Looking at the gas as a case, the gas as at December, 2022, was $2 …, if you look at that $2/tin based on the Foreign Exchange at that time, it amounted to about N900 -N1000. But fast track to December, 2023, if you convert $2 into Naira, you now know how much it is based on Exchange rate.”
The NERC Vice Chairman explained that going by these, it reflects in the chain of cost of operations, citing that gas that could have been bought by GenCos for N900, has gone up to N2000 just because of Foreign Exchange Rate.
Dr. Oseni further said: “Because the tariff payable by customers has change, this really affected the payments to the GenCos and that led to the situation that the GenCos were also unable to make payments for gas and that resulted to reduction of gas supply to the power sector because there is competitive demand for gas now.”
He however disclosed that NERC with the application of technology, “undertook review of performances of the DisCos service delivery to customers in bands A – E classified according to the number of hours supplied electricity.
“On that basis, the Commission has decided that many of the feeders that the DisCos currently brandish as band A are not meeting band A service and as such the feeders have been ordered to be downgraded immediately as a way of protecting consumers.
“So, on that basis, we have over 3000 feeders and initially, we had over 875 feeders as band A feeders based on classification by DisCos. But upon reviewing those feeders performance, the Commission has reduced it to under 500 feeders now which qualifies as band A feeders”, Dr. Oseni stated
He explained that from the Commission’s calculations, 17 percent of total feeders of DisCos are now qualified as band A feeders, adding that those feeders services an estimated 15 percent of electricity consumers.
“On the basis of that, the Commission reviewed applications from DisCos and decided that only the 17 percent feeders and less than 15 percent customers will be affected by any rate increase that the Commission will ever approve for the DisCos”, he stressed.
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