Why we gave approval for DisCos to hike electricity tariff —NERC

The Federal Government through the Nigeria Electricity Regulatory Commission (NERC) has explained why Distribution Companies (DisCos) in the country were given approval to increase tariff of Band A customers.

Ripples Nigeria reports that NERC recently approved a hike in the electricity rates for Band A customers (those who enjoy up to 20 hours of electricity supply daily) from the current ₦66 to ₦225 kilowatts per hour, effective immediately.

Explaining the reasons behind the hike, the vice president of NERC, Musiliu Oseni disclosed that the Commission is empowered by its Act to ensure that the licenses operating efficiently are allowed to recover sufficient revenue for the capital invested, for the operational cost as well as having a return for the investment they have made.

Oseni further said: “What informed the decision actually apart from the position of the Act is in the sense that if you look at December 2023 there was an improvement to the quality of service to January but from January up to date, there was a dip in generation availability.

“What caused that was because there was no review of the tariff. The DisCos cannot be mandated to pay for what they have not been allowed to charge and in that case, the payment to generation companies has significantly dipped which affects their ability to maintain their machine and also to pay for gas.

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“And if they are not able to pay for gas definitely, they won’t be able to generate, not minding the fact that they also need money to maintain their machines.

“So, we are at a point where it is clear that if nothing is done to ensure that tariff is reviewed so that the market can be relatively liquid the quality of supply won’t improve.”

Oseni also explained that the tariff review affects only band A customers because they receive about 20 hours of electricity daily.

He, however, said that before the tariff increase, the Band A category was reviewed down from over 1000 feeders to 481 feeders out of a total of 3000.

According to him, this is about 20 per cent of the total customers. “We currently have 800 feeders that are categorised as Band A, but it will now be reduced to under 500. This means that 17 per cent now qualify as Band-A feeders. These feeders only service 15 per cent of total electricity customers connected to the feeders.

By; Babajide Okeowo

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