Government Unveils Guidelines for Power Tariff Hike, Affects 11 Distribution Companies

By John Joseph

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The Nigerian Electricity Regulatory Commission (NERC) has released new guidelines for the power tariff hike, impacting the 11 distribution companies (DisCos) in Nigeria. This development is aimed at ensuring that the DisCos operate efficiently and provide better services to their customers.

According to the NERC chairman, Sanusi Garba, the new tariff regime is designed to allow the DisCos to recover their costs and invest in infrastructure upgrades. However, to cushion the impact on customers, the Federal Government has agreed to subsidize the new tariffs to the tune of N1.6 trillion throughout the year.

The new tariff structure is based on a cost-reflective tariff, which takes into account the actual costs incurred by the DisCos in generating and distributing electricity. For instance, the Abuja Electricity Distribution Company (AEDC) has been allowed to charge a tariff of N63.24 per kilowatt-hour (kWh), although the cost-reflective tariff is N120.88 per kWh.

Similarly, the Ikeja Electric and Ibadan DisCo franchises have been allocated tariffs of N56.6 and N63.24 per kWh, respectively. The estimated subsidy benefits for customers under these franchises are approximately N238.201 billion and N199.841 billion, respectively.

The NERC has also approved a monthly tariff review of the DisCos, which will be based on changes in inflation rates, Naira/US dollar exchange rates, and gas-to-power prices. This move is expected to ensure that the DisCos operate efficiently and provide better services to their customers.

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