NERC: FG Blocking Take-off of New Cost-reflective Electricity Rates

Electricity rates charged to consumers in Nigeria by their various electricity distribution companies (Discos) may likely remain as they are for now because the federal government is not disposed to allowing a new cost reflective tariff take off, the Nigerian Electricity Regulatory Commission (NERC), has said.

NERC, said it had conducted statutory reviews of the tariffs charged by the Discos to factor in extant changes such as inflation rates, exchange rates, and generation capacity, in their components but that the government had as a matter of policy, decided that the new rates be suspended.

A presentation made by a Principal Manager, Tariff and Rates at NERC, Aisha Mahmud, during a workshop organised for journalists in Abuja on Friday by the Association of Power Generation Companies (APGC) - an umbrella body of all the power generation companies (Gencos) in Nigeria, made it clear the commission had done what it ought to do on the review of electricity tariffs, but that the government was holding it back from implementing the new rates.

"We have done the review but waiting for government to implement it. It is a matter of policy," said Mahmud, in response to a question on why the commission has held back its implementation of the tariff it reviewed.

She also disclosed that from the last minor review the commission did, an average of N51 per kilowatt hour was the outcome, adding that most consumers in the residential cadre would not be able to afford the rate, and NERC had advised the government on either subsidising electricity consumption or consider other economical alternatives.

Just few days back, the 11 Discos stated that financial shortfalls from the backlogs of tariff reviews that were done but not implemented by the NERC had risen to N460 billion.

They claimed the backlogs were as a result of a 2015 decision of the NERC to freeze the residential-2 (R2) tariff cadre and removal of collection losses from their tariffs which resulted in a shortfall of N187 billion, the smoothening of the tariff for 10 years in 2016, which also resulted in another deficit of N227 billion, and additional changes in the tariff as a result of NERC's refusal to activate the minor review of the tariff in the second part of 2016, which resulted in another N46 billion.

Also, the Minister of Power, Works and Housing, Mr. Babatunde Fashola, had recently claimed that the last government of President Goodluck Jonathan, arm-twisted the NERC to suspend its implementation of the 2015 electricity tariff to enable it win the presidential election that year, his claims were however roundly debunked by a former chair of NERC, Dr. Sam Amadi, who said the decision of his team to suspend the tariff was entirely theirs and not in any way influenced by the government of the day then.

Similarly, Mahmud, disclosed that an application for an extraordinary transmission tariff review requested by the Transmission Company of Nigeria (TCN) to enable it undertake its operations was under consideration, and that it would go through public consultation before an outcome on it will be known in 2018.

"We have received TCN's request for a review of its tariff, but as you know, it has to go through public consultation before anything decision on it can be reached, and by next year we should have a cost-reflective tariff for TCN," she added.