Electricity tariffs to rise by 40% next month

 

Chairman, NERC, Dr Sam Amadi.

Plans have been concluded to increase electricity tariffs by as much as 40 per cent for some customers next month as a fall in the value of the naira and rising costs hinder efforts to end daily blackouts in Africa’s largest economy.

“We are working on the numbers and going through the processes,” Bloomberg quoted the Chairman, Nigerian Electricity Regulatory Commission, Dr. Sam Amadi, as saying.

According to him, some tariffs will increase by five per cent, while others will see prices raised as much as 40 per cent, depending on the electricity distribution companies and class of customer, adding that the change in rates would take place mid-November.

After proposing to NERC last week an average increase of 49.4 per cent in electricity tariffs for residential customers, the power distribution companies have also sought a hike in the rates payable by commercial consumers by 21 per cent on the average. Their demands, however, are subject to approval by NERC, the regulator of the power industry.

A copy of the proposed tariff for residential customers by the power firms showed that the average percentage increase in tariff as presented by 10 Discos was 49.4 per cent.

The Abuja, Benin, Enugu Jos and Ibadan power distribution firms proposed 48 per cent, 61 per cent, 60 per cent, 63 per cent and 56 per cent increase in tariffs for R1 customers, respectively.

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Similarly, the Ikeja, Kano, Port Harcourt and Yola Discos proposed 32 per cent, 40 per cent, 46 per cent and 83 per cent increase in electricity tariff in their submissions to NERC, while the Eko Disco requested the least increase in tariff at five per cent for R1 customers.

For commercial consumers, the firms are proposing 21 per cent increase in tariff for those in the C1 category.

The document defines a commercial consumer as a person who uses his premises for any purpose other than exclusively as a residence or as a factory for manufacturing goods.

Seven out of the 10 distribution firms that submitted proposals to NERC demanded various percentage increase in the tariffs of their commercial consumers.

The Enugu Electricity Distribution Company is seeking 56.53 per cent increase in the commercial tariff; Jos, 30.01 per cent; Ibadan, 18.64 per cent; Ikeja, 25.02 per cent; Kano, 46.93 per cent; Port Harcourt, 10.99 per cent; and Yola, 43.16 per cent.

Two of the firms, the Abuja and Eko Discos, did not request any increase, while the Benin Disco reduced its commercial tariff by 23.55 per cent.

The country unbundled its power monopoly and sold 15 generation and distribution companies in 2013 to private investors in an attempt to end the crippling electricity shortages.

Generated output had never risen above 5,000 megawatts, which is about a third of peak demand, while the state-owned transmission system cannot deliver any more than that before it starts breaking down.

Efforts to boost power supply have been hampered by factors including gas supply, foreign exchange shortage and inflation that have increased the cost of energy and infrastructure for the power companies, Amadi said.

“The law provides for periodic price review when the cost profile changes,” he added.

A slump in crude prices in the past years has put pressure on the naira, forcing the Central Bank of Nigeria, which bailed out the power companies last year, to twice devalue the currency since November. The inflation rate climbed to the highest in more than two years in September to 9.4 per cent.