The Nigerian Electricity Regulatory Commission (NERC) says a new tariff template the will see electricity consumers pay more across different electricity distribution platforms in Nigeria will take off by the end of October.
NERC Chairman, Dr. Sam Amadi who made the disclosure during a ‘Powering Africa Conference’ in Abuja last weekend, explained that the latest tariff hike was designed to ensure cost-reflective tariffs in the Nigerian electricity supply industry, capable of attracting private investments, especially foreign direct investments (FDIs), and to ensure that these investments were bankable.
Amadi, however, stressed that a balance needed to be maintained between investments attraction and winning the confidence of consumers. “Bills will go up, but service quality also has to be ensured. We have to bear that in mind,” he told a gathering of Nigerian power sector operators as well as local and foreign investors, including representatives from Manitoba Hydro International and the Africa Finance Corporation.
“The period for submission of tariff review applications by Discos closed last week, and the review of these applications for possible ratification will be conducted in the next 30 days,” he explained further.
The Electric Power Sector Reform Act (2005) empowers NERC to review electricity tariffs in favour of Gencos and Discos, if market variables such as gas and its transportation cost, as well as naira to dollar ratio and inflation shift by over 5 percent.
“At present, the changes in these variables against the initial benchmark set in the NESI is 55.5 percent for gas price, 23.9 percent for naira to dollar exchange rate, and 17.9 percent for naira inflation,” the Managing Director of Transcorp Ugheli Genco, Adeoye Fadeyibi disclosed last week during a presentation at a Senate power sector probe session. To this end, a 250 cent per mmBtu gas price has been established by Gencos and ratified by NERC. Also, the transportation cost of 80 cents per mmBtu, as against the current 30 cents being used in the NESI, is being considered by NERC for approval by the end of October.
In his own submission, the Managing Director/CEO of the Nigerian Bulk Electricity Trading (NBET) PLC, Rumundaka Wonodi disclosed that his agency has developed a bankable power purchase agreement (PPA) template for Gencos and Discos in order to ensure that PPAs were completed within three months and made functional and sustainable over time.
“We now have about 60 projects that we are dealing with Azura and ExxonMobil took about three years; Century Power took about two and a half years. When they started, they did not have every information needed to sign PPAs for transmission, gas availability, and local force majure in the NESI, so we were discussing and discovering along the line and everybody was getting feedbacks and that took a lot of time,” said Wonodi.
According to him, due to gas transportation challenges and dollar-naira rate fluctuations militating against market stability in the NESI, the Federal Government was being urged to put up a fund to manage these fluctuations.
By Olisemeka Obeche