NERC: New tariff will reduce 2024 electricity subsidy by N1.14trn

The Nigerian Electricity Regulatory Commission (NERC) says the newly approved tariff is expected to reduce subsidy for the 2024 fiscal year by about N1.14 trillion.

On April 3, NERC approved an increase in electricity tariff for customers under the Band A classification.

The commission said customers under the classification, who receive 20 hours of electricity supply daily, will pay N225 per kilowatt (kW), starting from April 3 — up from N66.

In a statement on Wednesday, Musliu Oseni, vice-chairman, NERC, said the new tariff would go a long way to provide a reliable power supply to drive the country’s economy.

“With the newly approved tariffs, subsidies for the 2024 fiscal year are expected to reduce by about NGN1.14 trillion in furtherance of the federal government’s realignment of the subsidy regime,” Oseni said.

Oseni said the federal government had indicated a transition in policy direction towards introducing a more targeted subsidy regime aimed at mitigating the impact of changes in macroeconomic parameters.

“While largely protecting vulnerable customers and fostering investments targeted at providing efficient service delivery in the Nigerian Electricity Supply Industry (NESI),” he said.

The vice-chairman added that the commission conducted a thorough review of the tariff applications submitted by the 11 electricity distribution companies (DisCos) in line with the processes established in its regulations and business rules.

He said the review process was preceded by an analysis of the performance improvement plans of the licences and included a public hearing during which interested stakeholders and intervenors examined the rate filing submitted by the public utilities.

“The overarching objective of the commission in the consideration of the tariff application is the creation of a financially sustainable electricity market providing adequate and reliable power supply to drive the Nigerian economy,” he said.

“The commission, upon due consideration of the tariff applications, has approved revised rates affecting only customers classified under Band Serv category which is about 15 percent of the customer population.”

Oseni, however, said the empirical service data had confirmed that this class of customers had truly received a committed level of service.

He said under the revised tariff order issued by the NERC, DisCos were under an obligation to provide customers classified under A and B service categories a minimum average supply of 20 hours a day measured over a period of one week.

“All other customers under B to E-service category, representing 85 percent of the customer’s population, will not be affected by the current review of end-user tariffs” Oseni said.

“All DisCos have been provided with mandatory targets for investments and migration of more customers to B.

“The commission has established a robust monitoring framework leveraging on technology to ensure that the public has visibility of the service covenant with their service providers.”

He said an enforcement and compensation mechanism had also been established in the event of service failure, adding that there would be a collaboration with policymakers to provide adequate and reliable electricity to all citizens.

Oseni said the commission would work diligently with state governments to deliver on the gains of the Electricity Act 2023.