The Federal Government may effect another tariff increase on September 1, 2021, based on details contained in a new tariff order issued by the Nigerian Electricity Regulatory Commission (NERC) to Electricity Distribution Companies (DisCos) and Electricity Generation Companies (GenCos), informing them of the approval to increase electricity tariffs.

Sources within the sector who requested anonymity confirmed the existence of the order. Several newspapers and online news media also reported news of the purported tariff increases. This will be the third tariff increase in about a year with the first covering the period from January to June 2021, the second, July to August 2021 and the final which will soon be announced, September to December 2021.

According to information contained in the tariff orders for customers in Lagos, they will see their tariffs increase by about N2 across board by September 1, 2021.

Post-paid customers of the DisCos are expected to start paying this tariff in October after they receive their September bills. However, prepaid customers who buy energy in September will experience tariff increases immediately.

The Tariff order reveals inflation rate, exchange rate, US Inflation rate, generation capacity and gas prices are major factors considered in increasing electricity tariffs.

According to NERC, the inflation rate used for January to May was 17.7% while they adopted 17.93% for the second half of the year. The inflation rate in Nigeria is currently 17.38%. US Inflation rate was adjusted to 4.2% in the second half of the year from 3.1% between January and May.

On the exchange rate, NERC reveals it used N405.14/$1 between January and May 2021 and has now adjusted it to N410 for the second half of the year.

Generation Capacity was adjusted to 5,267MW/h for September to December 2020 compared to 4,646 MW/h used for January- August 2021. This suggests NERC expects power consumption and availability to increase in the latter part of the year.

Gas prices including the cost of transportation adopted was $2.98/MMBTU. Other factors used to justify the increases were capital expenditure requirements and operational expenses expectation of the DisCos.

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