FG To Sustain Electricity Tariffs’ Subsidy, Despite Review – NERC

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The Nigerian Electricity Regulatory Commission (NERC) has approved electricity tariffs hike, effective January 1 2024, following a review of the Multi Year Tariff Order (MYTO), in order to enable the 11 electricity distribution companies (DisCos) to sustain their operations nationwide.

The Chairman of NERC, Sanusi Garba, who made this disclosure on Wednesday during a  media chat in Abuja, however, explained that the Federal Government would sustain the tariff subsidy in the sector to alleviate the hardship of consumers.

He pointed out that the upward review of the Multi Year Tariff Order review and the electricity tariffs were in compliance with the Electricity Act 2023, adding that the commission approved the hike after an application for tariff review by DisCos and a public hearing on the rate review were concluded.

The MYTO uploaded on the NERC website reflected the appropriate tariffs that consumers should pay for investors to recover their operating cost as well as the government’s policy on ensuring that due to the cost-of-living crisis, consumers will not be made to pay higher than prevailing rates.

The NERC Chairman clarified: “Government has decided for now, arising from the cost of living crisis and so many others, to in the meantime continue to subsidise electricity.

“In the new tariff order just published by the commission, you will discover that tariff is not going up but you will see what the Electricity Distribution Companies (DisCos) should be charging.

“You will also see in the tariff order the amount of subsidy the government will be providing to cover the gap between what they will charge and what they are allowed to charge”, Garba added.

According to him, the new tariff contains what the DisCos are allowed to charge based on government policy, if they are to remain in service as well as some provisions that would ensure that the DisCos pay what they are obligated to pay for purchases from Nigeria Bulk Electricity Trading Company (NBET).

He maintained that the Electricity Act that was signed by President Bola Tinubu in 2023 presented an opportunity for states to make laws and take charge of providing electricity in their franchise areas.

To ensure that the objectives of the enabling Act are achieved, the NERC chief restated the commission’s commitment to working with the states in such a manner that the existing public utilities were enhanced to boost electricity generation and supply nationwide.

On metering, Garba said that the commission had identified that the DisCos had  been facing funding challenges in their strive to provide meters to their customers, especially their inability to raise the required capital from the banks.

He further expatiated: “To reduce the rate of estimated billing, the commission created a framework under which the distribution companies can raise some amount of money to meter customers.

“So we decided that from the market revenues, we set aside a fixed amount that is dedicated for the provision of metering

“We are not saying that the money from the market on a monthly basis is the money to buy a meter.

“It is a potential lender to raise a pathway to pay whatever loan DisCos are going to get to provide meters”, the NERC chairman added.

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