Industrial and commercial consumers of electric power in Nigeria are expected to pay higher tariff for a unit of power in the coming year as National Electricity Regulatory Commission (NERC) unveils new tariff plans today.
The chairman of NERC, Dr. Sam Amadi, said this in Abuja yesterday at the the signing of a Memorandum of Understanding (MoU) between the CBN and all the Deposit Money Banks (DMBs) for the N213 billion legacy debt funding for the power sector.
Amadi said residential consumers of power will be expected to pay the new tariff after six months. He said the new tariff regime “is already well known to both the Central Bank of Nigeria (CBN) and the transaction advisers as well as the participants from the deposit money banks.”
He promised that the introduction of higher tariff would led to better power supply, thereby easing off any inconveniences.
“We will ensure that the tariff is cost-reflective, it will not constitute a burden on consumers immediately and so for avoidance of doubt with this facility, there will be no increase in electricity tariff for residential consumers for six months until we begin to see improvement.”
Essentially, the tariff, Amadi explained “is guaranteed to come into effect tomorrow (today) and it allows for full recovery and ensures that there is no risk that is not fully covered in this transaction.”
He said that NERC expected more gas inflow to the power stations with the injection of N213 billion.
He said: “This facility and other interventions in the next two, three, four months will bring about increase in capacity, there will be more reliability and the metering plan that is ongoing will ensure that consumers will be much more comfortable as they will witness increase in power supply.”
The objective of the N213 billion legacy debt facility was to make the power sector viable and reliable.
Amadi restated the Commission’s commitment to cost recovery by both the CBN and the designated banks in providing the fund and for other investors, who may want to invest either in upstream and downstream of the power sector.
The funding facility, Amadi stated “is about viability and with just 4,000 megawatts worth over N500 billion market, we expect that this facility will deepen the market and ensure not just a good business for the banks but also provide reliable power supply to Nigerian homes.”
CBN Governor Mr. Godwin Emefiele said they were “taking this bold step at this stage to now help the banks, who are themselves going to act as channels through which these funds would be paid to the discos and the GENCOS and the gas suppliers to come in to also sign their Memorandum of Understanding at the Central Bank of Nigeria with the NERC and CBN.”
Nigerian banks, he said, are predominantly the creditors in the books which further demonstrates the commitment of the banks to continue to support the growth of the power sector.
Emefiele stated that the N213 billion power sector intervention fund will ensure that “the least legacy debts that we have are cleared so that the market can be seen to be viable, and electricity can be begin to be generated and distribution improved upon for the good of our people.”
He said that gas tariff was subsequently reviewed to $2.50 whereas transportation was improved to 80 cents, increasing the gas tariff to about $2.80 cents.
Emefiele said the International Oil Companies (IOCs) the gas suppliers, have been assured that the present gas price will be commercially viable.
“Not only that, it will encourage them to improve on the gas production and supply but will indeed also encourage new investors to come into the market and then we can see a boost in the gas production industry in Nigeria,” the CBN chief said.