NERC Explains Electricity Tariff Hike

The current hike in electricity tariff is to keep power generation companies in business and also ensure their effective service delivery to consumers, according to the Nigeria Electricity Regulatory Commission (NERC).

The Commission’s Vice Chairman, Musiliu Oseni, who defended the new tariff regime explained that the decision was arrived at because has become increasingly difficult for generation companies to pay for gas and maintain their machines.

Speaking on the Channels Television programme, Politics Today on Wednesday, Oseni said the Commission had to approve the electricity tariff hike for customers under the Band A classification in line with the current economic realities in the country.

With this development, which Oseni maintains is meant to ensure power sector players remain in business on a competitive basis, customers would now pay N225 kilowatt per hour compared to the current N66.

According to Oseni, the sector is at a point where if nothing is done to ensure tariffs are reviewed, the market would be relatively liquid with Nigerians and many businesses being the worst for it.

He said, “If you look at section 116 subsection 2A of the electricity act, it mandates the commission to ensure that the licenses operating efficiency are allowed to recover sufficient revenue for the capital invested and for the operational cost as well as having a return on the investments they have made.

“In that case, it means that the onus is on the commission to ensure that operators earn sufficient revenue that we incentivize further investments to ensure improvement in service delivery.

“What informed the decision apart from the provision of the act, in December 2023, there was an improvement in the quality of service down to January. From then on there was a shortage in electricity availability. The lack of review of tariffs caused that.

“The Discos could not be mandated to forward what they had not been allowed to charge. For that, the payment to the generation companies has significantly dipped, affecting their ability to maintain their machines and pay for gas. And gas is one of the two significant raw materials for electricity generation in Nigeria.

Further defending the action taken by NERC, Oseni said; “At a point, it is clear that if nothing is done to ensure the tariff is reviewed, the market can be relatively liquid.”