Partial tariff hike rakes in N127bn additional revenue — NERC
THE Nigeria Electricity Regulatory Commission (NERC) says the recent partial hike in electricity tariff has fetched an additional N127 billion in revenue, thereby reducing the subsidy on power to about N130 billion per month.
Sanusi Garba, chairman of the NERC disclosed this to the Senate committee on power during an investigative hearing on electricity tariff hike on Monday in Abuja.
At the investigative hearing was also Adebayo Adelabu, the minister of power, representative of the Central Bank of Nigeria (CBN), and heads of agencies within the power sector.
Before the rate review, Garba mentioned that the Nigerian Bulk Electricity Trading (NBET) was issuing invoices of N260 billion monthly to 11 distribution companies, with only N20 billion expected to be paid due to a liquidity gap in the power sector, resulting in a monthly subsidy implication of about N240 billion.
The commission in early April raised the electricity tariff for customers enjoying at least 20 hours of power supply daily, categorised as Band A. The increase saw customers paying N225 kilowatt per hour from N66, a development that has been heavily criticised by many Nigerians.
He emphasised that the cost of electricity generation and the huge debt owed generating companies necessitated the tariff policy. He said by December 2023, debt owed generating companies stood at N460 billion and was not funded in the budget.
He further noted that the tariff policy was necessitated by the mounting debt owed generating companies and the cost of electricity generation, pointing to the December 2023 debt of N460 billion, which was not funded in the budget.
Garba explained that the migration to a servicebased tariff was lawful and involved extensive consultation with stakeholders, citing Section 116 of the Electricity Act, which allows for consideration of location and cost of providing service in rate methodology.
The Senate committee is investigating the over N2trn subsidy requirement stated by the minister of power to avoid the repeat of the fuel subsidy scenario and the N1.3trn the ministry is said to be owing generating companies as well as $1.3bn owed to gas companies.
The Senate is also investigating the role of the ministry of power, NERC, and ZIGLAKS Company on their failed agreement to provide meters and ensure Nigerians are not shortchanged.”
Eyinnaya Ababribe, chairman of the committee knocked NERC for the tariff hike. He said Nigerians were only paying for NERC’S inefficiency and other relevant government agencies.
“We want tariffs that are affordable to Nigerians”, Abaribe said.
The chairman stated the investigative hearing was anchored on two motions presented at plenary on Tuesday, July 25, 2023 and Wednesday, February 21, 2024, where the Senate by its resolutions mandated the committee to “engage with the ministry of power, NERC and other stakeholders.