Energy - News - May 1, 2021

Minister confirms imminent hike in electricity tariff

Says "there is no plan to significantly raise tariffs"

Nigerians should brace up for an imminent hike in electricity tariffs in the country despite a statement by the Minister of Power, Sale Mamman, to the contrary.
On Friday, the Minister issued a statement he signed personally urging consumers to dismiss rumours of an imminent “major hike in electricity tariff.”
Following the statement, some consumers expressed fears that the Minister’s clarification that “there is no plan to significantly raise tariffs” actually confirmed the contrary. 
“Instead of significant hike in electricity tariff, Nigerians should expect an increased efficiency in the sector to reduce tariffs, while managing headwinds from foreign exchange and inflation,” he stated. 
However, the Minister’s clarification appears to have done very little to allay the fears of Nigerians about an imminent hike in electricity price, whether major or insignificant.
Since the electricity sector regulator, the Nigerian Electricity Regulatory Commission (NERC) published the “Notice of Minor and Extraordinary Review of Tariffs for Electricity Transmission and Distribution Companies” on April 26, 2021, there have been speculations by consumers on the issue.
Despite the notice, the minister dismissed it as “routine procedure”, adding that the planned review by NERC  was in accordance with Section 76 of the Electric Power Sector Reform Act of 2005.
He said “the tariff for customers on service bands D & E (customers being served less than an average of 12 hours 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, he said, include the provision that NERC 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 NERC’s regulation obtains inputs from operators in the market every six months to perform minor reviews and a major review is required every ficve years.
Therefore, as in January, a minor review will occur in June.
“Given that the timing for the extraordinary review has also elapsed, a review will occur for consideration in January 2022,’ the statement said.
Mamman said the Buhari administration remained faithful to the adopted resolutions from the Joint Federal Government (FGN) -Nigeria Labour Congress (NLC) /Trade Union Congress (TUC) Technical Committee on Electricity Tariffs, which recommended for “NERC to conduct an extraordinary review of the MYTO to further review factors and align them with current evolving realities.”
The explained that the reason the recommendation was posited by the Committee was to ensure that efficiencies could be derived from an extraordinary review to further reduce tariff.
The government, he assured, was committed to increasing supplied energy to the national grid through rapid expansion of infrastructure through the various facilities for the sector, either to the distribution companies (DISCOs) under strict terms, or to the Transmission Company of Nigeria (TCN). 
On the National Mass Metering Programme, the minister said it was still on course to reduce capacity losses.
To date, he said more than 500,000 meters have been delivered to DISCOs in Phase 1 of the programme in the last five months, which exceeds the progress axhieved for the entire MAP scheme.
He said the government was determined to close the metering gap during the life of the administration.
The administration, the minister said, was not unaware of the challenges Nigerians face, which is why the 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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