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NERC postpones increase of electricity tariffs

NERC postpones increase of electricity tariffs

The Nigerian Electricity Regulatory Commission (NERC) has postponed the take-off of the new electricity tariff by the Electricity Distribution Companies (Discos) which was supposed to commence on April 1, 2020. NAIRAMETRICS reports

This was contained in a tariff order dated March 31st and published on the website of the commission.

Why it was postponed: According to NERC it postponed the order for a number of reasons. Firstly, it claims that 60% of electricity customers are unmetered nationwide and is a “major impediment to both an immediate tariff review and revenue protection of Discos.” 

It also cited the COVID-19 pandemic that has significantly impacted the ability of Discos to be meter customers through the meter asset provider scheme which it calls MAP. Discos complain that it has been unable to import critical components required for assembling meters due to the supply chain disruptions caused by the COVID-19 pandemic.

NERC also blamed the need for network and infrastructure upgrades by distribution companies and the Transmission Company of Nigeria as necessary to ensure a stable power supply.

What the order says: The electricity regulatory body had previously earmarked April 1st for an increase in electricity tariffs across the country in line with its extraordinary tariff review program.  However, it has now mandated that there will be no increase in electricity tariff until a minor review is order is issued June 30th, 2020.

NERC also mandated all distribution companies to continue billing customers the current electricity tariff which has been in force since 2016. This is a temporary setback for Discos, Gencos, and other power sector stakeholders who have for years called for a cost-reflective tariff for the sector. By this Order, NERC has also revealed that a full cost-reflective tariff (when the government will no longer subsidize tariff) will commence in July 2020 after Discos must have submitted and gotten approvals for their performance improvement plans.

NERC also requested that Discos also comply with the minimum remittance order which mandated distribution companies to remit to the power sector value chain a minimum amount regardless of whether they collect the money from their customers or now.

Optic: For now, all electricity tariffs increases have been suspended until June 30th when it will be revisited. While this makes the government look good Nigerians continue to bear the cost of a tariff subsidy especially now that government revenues are in dire state.

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