The Nigerian Electricity Regulatory Commission (NERC) has announced a reduction in the tariff of electricity in the country.
The announcement was made on Tuesday by the Chairman, Chief Executive Officer (CEO) of the Commission, Dr. Sam Amadi.
According to Amadi, the reduction is a response to the pressure by the Manufacturers Association of Nigeria (MAN). He added that NERC came to the conclusion to reduce the tariff after a meeting with CEOs of power distribution companies.
Amadi revealed that NERC also reviewed the technical and financial assumption of MYTO 2.1. He explained that the review showed that the underlying cause of the skyrocketing increase in the tariff is the huge Aggregate Technical, Commercial and Collection (ATC&C) losses, which are passed through to consumers.
“In some DISCOs ATC&C losses increased tariff by as much as 80-103 percent,” Amadi said.
However, he explained that it is the responsibility of the DISCOs to collect their revenue from their customers.
“Failure to do so should not be a penalty to customers who pay their bills. It is clear that removing the collection losses will lead to lower tariffs for consumers. The removal of collection losses from customer tariff has reduced tariff by more than 50 percent in some places. Please note that the reduction does not affect the CBN facility and its repayment,” he said.
He further stated that the reality made the commission to issue a new order to the effect that henceforth collection loss, which is defined as the ‘amount billed but not collected’, will not be automatically passed on to consumers of electricity.
“Consequently, the collection loss for all DISCOs is set at zero. It is now the responsibility of DISCOs to convince the regulator of any exceptional circumstances for such loss to be passed to the consumers,” Amadi said in the statement.
“This new order now amends the MYTO 2.1 and has reduced the tariff to be paid by all class of consumers. In the review MYTO 2.1 the Commission followed due process and the regulatory principles. The EPSR commits the Commission to ensuring full recovery of prudent costs for efficient operators. The Commission is obligated to make sure that only prudent and efficient costs are passed to consumers. The principle is to ensure that the distribution company operates efficiently and provide quality and affordable services to consumers.”
He assured Nigerians that the NERC remains committed to the principle of cost- reflective pricing and to the development of an efficient and financially viable electricity market.
“These are important to support the investment that is needed to ensure the electricity supply industry meets the needs of the Nigerian economy,” he added.
He also mentioned that the decision to review tariff is completely compatible with the terms of the privatisation and has been reviewed with the Bureau for Public Enterprises (BPE).
“NERC and BPE are working together to advocate for series of fiscal policies that will foster easier access to investible capital to further increase capacity and enhance reliability in the sector,” Amadi concluded in the statement.
