IN the midst of Nigerians’ difficulties with economic hardship, the federal government, through the Nigerian Electricity Regulatory Commission (NERC), yesterday approved an upward review in electricity tariff.
The NERC issued a new tariff order that was posted on its website on Tuesday.
The Multi Year Tariff Order (MYTO) came into effect on January 1.
According to the NERC, non-maximum demand (MD) customers of the Abuja Electricity Distribution Company (AEDC) band will retain the N68.20 per kilowatt tariff. The review has affected the cost reflective tariff for the band, which was N88.47 in 2023 but now N124.42 this year, indicating a N35.95 increase per kw. It means that the government has subsidised N35.95 for consumers in the category. Under the Eko Electricity Distribution Company (EKEDC) band, non-maximum demand (MD) customers, who paid N67.48 last year, will still to pay the same price this year. However , their cost reflective tariff has moved from N89.03 last year to N114.84 this year. This indicates a subsidy of N25.81 per kw.
NERC Chairman Sanusi Garba clarified that the cost of a kilowatt of electricity varies among different Electricity Distribution Companies due to their economic peculiarities.
The chairman stated that the tariff order clearly outlines the appropriate tariffs DisCos should charge to maintain business, including 110, 120, and 130.
Garba emphasized that the government has published the charging parameters and allowed charges for DisCos based on government policy due to the living crisis and ongoing subsidization of electricity.
“So, if you check the order you will see that tariffs are not going up but in the order, you will see what the DisCos should be charging.
“You can also see in the order the amount of subsidy the government will be providing to cover the gap, what they should charge that they are not allowed to charge without subsidy,” he said.
According to Garba, the government will need to spend between N120 billion and N130 billion monthly (N1.6 trillion) to subsidise electricity this year.
When asked how long the government would provide the subsidy, Garba responded: “We will take it into consideration in our next tariff whenever the government takes a decision on subsidy.
“In other words, even if there is an upward review of the cost of electricity, the government will be absorbing the increase for as long as it can.”