The federal government of Nigeria has approved the implementation of a fresh hike in electricity tariff in the country.
The upward review was confirmed by the chairman of the Nigerian Electricity Regulatory Commission (NERC), Sanusi Garba, on Wednesday who said the new rates are effective from January 1, 2024.
He, however, added that the government has decided to continue to subsidize electricity this year, hence consumers may not feel the impact of the upward review in tariff because the government would be paying the differential.
Asked for how long the government will pay the subsidy, Garba said: “Any time the government takes a decision on subsidy, we will take it into consideration in our next tariff.
“In other words, even if there is an upward review of the cost of electricity, the government will be absorbing the increase for as long as it can.”
The NERC chairman explained that based on the new tariff, non-maximum demand (MD) customers of the Abuja Electricity Distribution Company (AEDC) band will retain the N68.20 per kilowatt tariff.
The review has affected the cost-reflective tariff for the band, which was N88.47 in 2023 but is now N124.42 this year, indicating an N35.95 increase per kw. It means that the government has subsidised N35.95 for consumers in the category.
Under the Eko Electricity Distribution Company (EKEDC) band, non-maximum demand (MD) customers, who paid N67.48 last year, will still pay the same price this year. However, their cost-reflective tariff has moved from N89.03 last year to N114.84 this year. This indicates a subsidy of N25.81 per kw.
Garba, however, added that the cost of kilowatt of electricity differs from one Electricity Distribution Company (DisCo) to the other, owing to their economic peculiarities.
He emphasized that what was published on the NERC website is what the discos are expected to charge to remain in business, but because of the subsidy provided by the government, what consumers would actually pay won’t be up to the specified amount.
The chairman said: “The commission has issued a tariff order that was just posted on our website yesterday (Tuesday).
“The tariff order contains the appropriate tariff the DisCos should be charging if they have to remain in business and the rules are very clear about the tariff order: some 110, some 120 and 130.
“Different DisCos have different parameters, efficiency levels and so on.
“But we have published what they should charge. We have also published the amount they are allowed to charge based on government policy because government has decided for now because of the living crisis, and so many things to in the meantime continue subsidizing electricity.
“So, if you check the order you will see that tariffs are not going up but the in the order, you will see what the DisCos should be charging.
“You can also see in the order the amount of subsidy the government will be providing to cover the gap, what they should charge that they are not allowed to charge without subsidy.”