There are strong indications that Nigerians will pay more for electricity from April 2020 following a directive by the Nigerian Electricity Regulatory Commission (NERC) ordering a review to achieve a cost-reflective tariff in the power sector.
NERC disclosed in its ‘December 2019 Minor Review of Multi-Year Tariff Order 2015 and Minimum Remittance Order for the Year 2020,’ which was released on December 31.
According to the order, effective from January 1, the tariff will reflect the impact of changes in the minor review variables in the determination of cost-reflective tariffs and relevant tariff and market shortfalls for 2019 and 2020.
The commission said the order also determined the minimum remittances payable by the distribution companies (DisCos) in meeting their market obligations based on the allowed tariffs.
“The Federal Government’s updated Power Sector Recovery Programme (PSRP) does not envisage an immediate increase in end-user tariffs until April 1, 2020 and a transition to full cost reflectivity by end of 2021.
“In the interim, the Federal Government is committed to funding the revenue gap arising from the difference between cost-reflective tariffs determined by the commission and the actual end-user tariffs payable by customers,” it said.
According to NERC, all DisCos are obligated to “settle their market invoices in full as adjusted and netted off by applicable tariff shortfall.”
“All Federal Government intervention from the financing plan of the PSRP for funding tariff shortfall shall be applied through NBET and the market operator to ensure 100 per cent settlement of invoices issued by market participants.
“Effectively, this order places a freeze on the tariffs of TCN and administrative charges until April 2020 at the rates applied in generating MO invoices for the period of January to October 2019,” it said.
Currently, the Federal Government has been subsidising the power sector due to non-review of the Multi-Year Tariff Order 2015. And by implications, it means Nigerians will pay more for electricity which currently stands at N27.04 kWh for residential (R2) and a monthly fixed charged of N781.
Nigerians have decried the spate of estimated billing which is regarded as extortion of customers and they have been calling for installation of prepaid meters.
According to a report by NERC, less than five million people have access to prepaid meters and the commission introduced another scheme called Meter Asset Providers Scheme (MAPs) to assist the DisCos in efficient roll-out of prepaid meters in the sector.