FG Cuts Electricity Tariff By Over 50 Percent

NRC-logoAmid agitation for reduction in electricity tariff, which had been on for several months, especially for industrial users, Nigeria’s Federal Government on Tuesday announced over 50 per cent reduction in the tariff.

The new tariff was announced by the Chairman/CEO of the Nigerian Electricity Regulatory Commission, Dr. Sam Amadi.

He said the cut followed complaints against the increase in tariff of different consumer classes by industrial and commercial consumers under the Manufacturers Association of Nigeria.

Amadi explained that the NERC invited the CEOs of power distribution companies for talks following the complaints.

According to Amadi in a statement: “The Commission also invited the Chief executive Officers of the distribution companies to the hearing to respond to the case of the consumer groups.

“Furthermore, the Commission reviewed the technical and financial assumption of MYTO 2.1.

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“The review shows that the major underlying cause of the skyrocketing increase in the tariff is the huge Aggregate Technical, Commercial and Collection losses, which are passed through to consumers.

“In some DISCOs ATC&C losses increased tariff by as much as 80-103 per cent.

“It is the responsibility of the DISCOs to collect their revenue from their customers.

“Failure to do so should not be a penalty to customers who pay their bills.

“It is clear that removing the collection losses will lead to lower tariffs for consumers.

“The removal of collection losses from customer tariff has reduced tariff by more than 50 per cent in some places.

“Please note that the reduction does not affect the CBN facility and its repayment.

“Therefore, On Monday, March 9, 2015 the Nigerian Electricity Regulatory Commission issued a new order to the effect that henceforth collection loss, which is defined as the ‘amount billed but not collected’, will not be automatically passed on to consumers of electricity.

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“Consequently, the collection loss for all DISCOs is set at zero.

“It is now the responsibility of DISCOs to convince the regulator of any exceptional circumstances for such loss to be passed to the consumers.

“This new order now amends the MYTO 2.1 and has reduced the tariff to be paid by all class of consumers. In the review MYTO 2.1 the Commission followed due process and the regulatory principles.

“The EPSR commits the Commission to ensuring full recovery of prudent costs for efficient operators. The Commission is obligated to make sure that only prudent and efficient costs are passed to consumers. The principle is to ensure that the distribution company operates efficiently and provide quality and affordable services to consumers.

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“NERC remains committed to the principle of cost- reflective pricing and to the development of an efficient and financially viable electricity market. These are important to support the investment that is needed to ensure the electricity supply industry meets the needs of the Nigerian economy.

“The decision to review tariff is completely compatible with the terms of the privatization and has been reviewed with the Bureau for Public Enterprises. NERC and BPE are working together to advocate for series of fiscal policies that will foster easier access to investible capital to further increase capacity and enhance reliability in the sector.”

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