The Nigerian Electricity Regulatory Commission, NERC, has announced the approval of the review of Multi-year Tariff Order, MYTO, with effect from June 1, 2014.
With this approval, it means that Nigerians will now pay more for electricity used, not minding the worsening electricity situation in the country.
The new tariff order shows that average income consumers in most of the major cities of Nigeria will pay more per unit of electricity used from June.
Consumers in Eko zone of Lagos, who hitherto paid N12.87 per unit of electricity, will now pay N15.63; while consumers in Abuja who used to pay N13.25 will now pay N14.70 per unit.
Consumers in Kano who used to pay N13.98 will now pay N16.01 per unit while consumers in Port Harcourt zone who used to pay N13.60 per unit will now pay N15.09.
Chairman of the Commission, Sam Amadi, while explaining the new tariff in Abuja, however said with the new tariff, the fixed charge component of the tariff structure would be reduced.
He said under the new tariff structure, the different categories of electricity consumers in Abuja, Benin, Eko, Enugu, Ibadan, Ikeja, Jos, Kaduna, Kano, Port Harcourt and Yola power distribution zones would be paying slightly different tariffs for electricity consumed, but commensurate with the operational cost in their area.
While consumers in all the zones that fall under the lowest-income consumers (R1 class) category would continue to pay N4.00 per unit as energy charge, those in R2 category (average income class) in Abuja, who were paying N985.92 as monthly fixed charge would now be N702.11, while energy unit charge would be reviewed from N13.25 to N14.70, effective June 1.
R2 consumers in Benin zone, who were paying N1,500 monthly fixed charge would now pay N750, while energy charge of N11.94 per unit would now attract N14.82 charge per unit.
In Eko, monthly fixed charge of N1,125 would now be N750, while N12.87 energy charge per unit would now be N15.63. In Enugu, monthly fixed charge for R2 consumer has been reviewed from the previous N874.17 to N650, while energy charge per unit formerly N15.57 would now be N16.44.
For Ibadan, the same category of consumers who have been paying monthly fixed charge of N781.13 would now pay N624.95, while energy unit charge formerly N13.56 would now be N16.11. For Ikeja, the monthly fixed charge hitherto N894.56 would now be N750, while energy unit charge would remain unchanged at N13.21.
In Jos zone, monthly fixed charge formerly N1,152.50 would henceforth be N775, while energy unit cost would change from N14.32 to N16.75.
In Kaduna, monthly fixed charge has been reviewed from N1,280 to N781.13, and energy unit charge from N15.36 to N17.
The monthly fixed charge for Kano previously N889.47 has been changed to N686.89 and energy unit charge of N13.96 changed to N16.01; while Port Harcourt consumers who have been paying a monthly fixed charge of N1.050 would be paying N700 and energy unit charge reviewed from N13.50 to N15.09.
Consumers in Yola zone who have been paying N1,250 as monthly fixed charge would now pay N750 and a new energy unit charge of N15 from the N12.78 they have been paying.
Under the MYTO, electricity tariffs are subject to reviews biennially on June 1 and December 1 every year.
Amadi said the review was necessary to ensure that some critical and financial variables in the electricity tariff structure in the country were adjusted to current realities, namely the prevailing rate of inflation, the exchange rate of the Naira, the price of natural gas, and available electricity capacity.
He said that electricity prices were adjustable to these variables to ensure that the Nigerian electricity market remained financially viable and able to attract investment to improve electricity generation capacity and supply reliability.
According to him, where the review of MYTO shows the aggregate variable change to be about five per cent of the existing MYTO figures, the changes would be considered significant enough to warrant a review.
The current review, he said, showed some significant changes that have made the tariff review necessary. “While MYTO had projected an inflation rate of 13 per cent, the inflation rate as at March 30, 2014 (the cut-off date for the reviews) is 7.8 per cent, which is 5.2 per cent less than projected,” he said.
“Similarly, MYTO had projected an exchange rate (for the Naira) of $1 to N178. But, as at March 30, 2014, the Central Bank of Nigeria, CBN shows a rate of N157.30 to $1, about 11.6 per cent less than projected.”
The result of the review, the chairman said, revealed a reduction of the wholesale tariff price to be paid to the electricity generation companies, GENCOs as at June 1, pointing out that this is only one of the three components that make up the electricity supply chain.
The other components include transmission and distribution, indicating that one of the reasons for the review of the tariff was available electricity generation capacity currently at about 4,306 megawatts, MW as at March 31 review date.
The capacity, the NERC Chairman said was about 52 per cent below the 9,061 MW, which the Commission had based its projection when fixing the MYTO 2 tariff in June 2012.
Despite the loss of available capacity, Amadi said the significant fixed costs by all three sectors in the Nigeria Electricity Supply Industry would have to spread over a much lower quantity of energy projected for sale to customer.
“For this reason, the Commission regrets that the end user or customer tariff element will have to increase in fulfillment of the statutory obligation in section 5.76(2)a of the Electric Power Sector Reform Act 2005,” he said.
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