More Hardship for Electricity Consumers as FG Removes Subsidy, NERC Approves New Tariff

More Hardship for Electricity Consumers as FG Removes Subsidy, NERC Approves New Tariff

More burden was added to the plight of electricity consumers as the Nigerian Electricity Regulatory Commission on Wednesday issued new tariffs for band A consumers, who enjoy a minimum power supply of 20 hours a day. This came barely twenty-four hours after the Federal government announced it would be removing electricity subsidy for 15 percent

More burden was added to the plight of electricity consumers as the Nigerian Electricity Regulatory Commission on Wednesday issued new tariffs for band A consumers, who enjoy a minimum power supply of 20 hours a day. This came barely twenty-four hours after the Federal government announced it would be removing electricity subsidy for 15 percent of consumers.

The customer base of electricity consumers in Nigeria is about 12 million people, but only about 15 percent or 1.8 million customers will be affected by the new tariff. Most of the Band A customers reside in highbrow areas in the big cities.

NERC’s Vice Chairman, Mr. Musliu Oseni at a press briefing in Abuja said the increase will see customers pay N225 kilowatt per hour from the current N66 which represents over 300 percent increment.

According to him, the commission had prior to this increase, downgraded some customers on the Band A to Band B due to non-fulfilment of the required hours of electricity provided by the electricity distribution companies.

His words: “We currently have 800 feeders that are categorised as Band A, but it will now be reduced to under 500. This means that 17 percent now qualify as Band A feeders. These feeders only service 15 percent of total electricity customers connected to the feeders.

“The commission has issued an order which is titled April supplementary order and the commission allows a 235 kilowatt per hour.” However, he said the review will not affect customers on the other Bands.

The development comes amid Monday’s announcement by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) of an increase in the price of natural gas, which is used to generate more than 70% of electricity in Nigeria.

According to the federal government, this will reduce its N3.3tn cost and save the government about N1.1tn annually.

Special Adviser on Information and Strategy to the President ,Mr. Bayo Onanuga, on Tuesday said the Bola Tinubu – led administration was poised to allow the price hike in electricity given its N450bn budget for energy subsidies in 2024. ⁣

“Consequently, power distribution companies will be allowed to increase prices from N68 to N200 per kilowatt-hour for urban consumers in April”,Mr. Onanuga said.

According to Mr Onanuga, the country last reviewed electricity tariffs in 2020, and the planned increase would enable Discos to recover costs and improve investments.⁣⁣

“With the huge subsidy burden and high cost of gas…the current electricity tariff is not realistic,” he said.

⁣Coincidentally, despite the persistent epileptic power supply nationwide an electricity report released by the National Bureau of Statistics(NBS) on Monday does not show that the Discos were under any financial weight as the NBS report showed that electricity distribution companies in Nigeria saw their revenues surge to N1.1tn in 2023.⁣

The figure represents an increase of N234.4bn or 28.2 per cent from the N831bn generated by the power firms over a similar period in 2022.⁣

The International Energy Agency(IEA) report revealed that Nigeria’s national power grid collapsed 46 times from 2017 to 2023.

According to the IEA report, Nigerians endured more nationwide blackouts in 2023, especially on September 14 when the grid collapsed due to a fire on a major transmission line.⁣

An analysis of the revenue data showed that the Ikeja Electricity Distribution Company got the highest revenue of N218.6bn, up by 31.7 per cent or N52.7bn from N165.9bn recorded in 2022.⁣

It was followed closely by the Eko Distribution Company, which got a revenue increase of N52.8bn or 42.3 per cent from N124.8bn in 2022.⁣ Third on the list is the Abuja Electricity Distribution Company, (AEDC) with a revenue generation of N167.4bn from N125.7bn recorded in 2022.⁣

Also, Ibadan Electricity Distribution Company got a revenue of N111.3bn, Enugu Electricity Distribution Company got a revenue of N82.5bn, Yola Electricity Distribution Company (N22.3bn), and Benin Electricity Distribution Company (N84.6bn), and Kaduna Electricity Distribution Company (N32.4bn).⁣

Jos Electricity Distribution Company increased its revenue to N38.9bn, Kano Electricity Distribution Company (N55.2bn), and Port-Harcourt Electricity Distribution Company (N74.7bn).⁣

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