The Nigerian Electricity Regulatory Commission (NERC) has announced an increase in tariff payable by customers of all classes.
The hike, which is effective January 1st, 2021, is coming two months after the Commission effected a new tariff regime for each of the eleven Electricity Distribution Companies(DisCos).
In a statement issued, on Tuesday, the Commission denied reports that it increased tariff by over 50 percent, rather, it said the rates for service bands A, B, C, D and E were adjusted by N2.00 to N4.00 per kWh to reflect the partial impact of inflation and movement in foreign exchange rates.
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“No approval has been granted for a 50 percent tariff increase in the Tariff Order for electricity distribution companies which took effect on January 1, 2021,” it says.
Also, it states that the tariff for customers on service bands D and E, that is customers being served less than an average of 2hrs of supply per day over a period of one month remains frozen and subsidised in line with the policy direction of the Federal Government.
Meanwhile, in a revised order NERC/225/2020 for Ibadan Electricity Distribution Company (IBEDC) earlier sighted and signed by the new Chairman, Engr Sanusi Garba, on December 30, 2020, the commission says the Order considered the impact of inflation rates (Nigeria and USA), foreign exchange rate (NGN/USD), gas prices, available generation capacity and material variances to the accompanying CAPEX and OPEX required for the evacuation and distribution of available generation capacity.
For Nigeria’s inflation rate, it said the actual monthly average inflation rate of 13.1 per cent for the period January to November 2020 was used for review of the year 2020 tariffs, while the November 2020 inflation rate of 14.9% as obtained from the Bureau of Statistics was adopted to project Nigerian inflation rates for 2021.
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Also, it said the official exchange rate from the Central Bank of Nigeria with a 1 per cent premium was used for the retroactive review of the year 2020.
“Accordingly, the average NGN/USD exchange rate plus 1 per cent for the period of 1st January to December 15th 2020 of N360.8 was used to review the year 2020 tariffs. The NAFEX closing NGN/USD exchange rate +1% of N397.44 as at 29th December 2020 was adopted to project NGN/USD exchange rate for 2021 and beyond,” it states.
Reacting to the leaked Order, a highly placed Source at the Commission who pleaded anonymity told Tribune Online that each of the DisCos were issued different Orders which have not yet been made public.
According to the source, IBEDC had jumped the gun by going ahead to leak the approval granted to it.
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“All the DisCos were given separate independent approvals but we were waiting for the official communication to get to them before we will issue the statement.
“Some of the companies engage in these acts because of sinister motives.”
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