The Nigerian Electricity Regulatory Commission (NERC) has given explanations to its decision last Wednesday to approve a 241 percent hike in electricity prices for consumers in its Band A categories of customers currently enjoying supply by electricity distribution companies for an average of 20 hours a day.
This is coming as the Manufacturers Association of Nigeria (MAN) and organised labour under the aegis of the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) have condemned the decision by the federal government.
They argued that the decision to hike electricity tariffs at this time when the people are already burdened by other socio-economic challenges would worsen their conditions, as more manufacturing firms and businesses would fold up, while inflation would skyrocket, and micro, small and medium enterprises would be stifled.
The Vice Chairman of NERC, Musliu Oseni, who announced the tariff review during a media briefing in Abuja said consumers classified under the Band A category of customers would henceforth pay an average of N225 per kilowatt hour (kWh), about N159 per kWh above the current tariff rate of N66 per kWh.
But, a publication on the key market indices obtained from the Commission on Thursday in Abuja highlighted the macroeconomic indicators that may have informed the hike.
Apart inflation rate, which grew by 12 percent, from an average of 28.2 percent in January 2024 to the current 31.7 percent, the publication revealed that the prevailing exchange rate of the Naira to the dollar also spiraled by 59 percent, from an average of N919.39 in January to about N1,463.30 in April.
Other indicators taken into consideration by the regulatory authority in arriving at its decision to hike the tariff, the publication showed, included the rising cost of generating electricity in the industry, which grew by 63 percent between January and April, from N63.80 per kilowatt hour (kWh) to N103.90 kWh.
Besides, the cost of transmission of electricity and administration by the Transition Company of Nigeria ((TCN) jumped by 34 percent during the corresponding period, from N6.80 per kWh to N9.10 per kWh, while the cost of gas supply to the electricity generating companies (GENCos) rose by 11 percent, from $2.18 per million British thermal unit (BTU) in January to $2.42 MBTU in April.
Before last Wednesday’s tariff increment, the Nigerian Midstream-Downstream Petroleum Regulatory Authority (NMDPRA), which is in charge of the pricing for gas supplied to the power sectors, released an increase in the price of natural gas, which is a major source of energy for power generation in the country.
During the media briefing on Wednesday, Oseni said that based on these indices, it was inevitable for the electricity sector regulator to consider the decision to approve the application by the DISCOs for a price adjustment if they were to maintain their operations and remain in business to supply electricity to the people.
