‘We’ll review tariff every six months’ — NERC confirms removal of electricity subsidy

The Nigerian Electricity Regulatory Commission (NERC) has confirmed the removal of electricity subsidies by the federal government, adding that the commission will review tariff rates every six months.

Over the weekend, Zainab Ahmed, minister of finance, had announced the removal of subsidy on electricity tariff.

Speaking during a press briefing on Wednesday, Sanusi Garba, NERC chairman, said the commission played a role in ensuring that tariff rates were regulated.

“The role of the commission is to make a determination of the rates that consumers should pay. So we strike a balance between consumers and investors,” Garba said.

He said that the electricity subsidy had been reduced in the past four to five years over its unsustainability regarding investors’ return on investments. 

“Now subsidy is a policy issue determined by the government. The government will decide that the rates calculated or agreed by the regulator may at this time not be passed on to consumers. It has happened many times,” he said. 

“In the past four, five years the level of subsidy has gradually been reduced, because you cannot run the electricity market on life support and say that investors cannot get their return on investment until government steps in to provide the required funding.

“So that policy decision (stopping electricity subsidy) is as announced by the Minister of Finance. The subsidies have been, at one time as high as N600 billion a year, and gradually coming down to about N30 billion or so this year.”

Speaking on tariff hike, the NERC chairman said the adjustment was made in February following underlying economic considerations. 

“What happened on February 1, 2022, is a minor review of tariff. It is very clear on our website that every six months we will adjust rates to take care of the foreign exchange component of cost and also inflation,” Garba said.

Garba said the tariff adjustment was straightforward, emphasising that the distribution companies were meant to inform their customers of the changes.

On the recent blackouts and repeated collapse of the national electricity grid, the NERC boss said the rupturing of gas pipelines by vandals and routine maintenance works on some power plants contributed to the instability of the country’s power system.