Nigeria Content Online

The
Nigerian Electricity Regulatory Commission (NERC) has said that it does
not plan to introduce higher electricity tariffs in the country.

Sam
Amadi, the Commission’s chairman, said in Abuja yesterday that the
reported impending hike in electricity tariffs under the multi-year
tariff order (MYTO) is untrue.

Mr. Amadi further assured consumers that no such action was being contemplated by the commission.

“No
decision has been taken yet by the government on new electricity tariff
in the country, contrary to speculative reports making the rounds in
some media in recent times. If there is any such plans, NERC, which is
the only agency mandated through the provisions of the Electric Power
Sector Reform (EPSR) Act 2005 to regulate the Nigeria Electricity
Supply Industry (NESI) and take decisions on tariffs, should know,” Mr.
Amadi said.

He
added that the EPSR Act 2005 mandates the Commission to, among other
responsibilities, set end-user electricity tariffs, utilising the
methodology of the Multi-Year Tariff Order (MYTO) to arrive at
cost-reflective tariffs for different categories of consumers.

The
MYTO scheme, which came into effect in 2008, was adopted to allow
fixing of electricity prices for up to five years in place of single
year tariff order previously in operation, which limited tariffs to be
set only for the in-coming year.

Under
the plan, provisions are made for limited tariff adjustments each year,
according to prevailing inflationary trend and changes in fuel costs,
with major reviews conducted at five year intervals to allow the
evolution of appropriate tariff template within a projected time frame
of 15-years.

At
present, government-approved electricity pricing per kilowatt hour
(KWH) averages between N4 and N6 for single-phase customers as well as
N6 and N8 for industrial users, while maximum demand users pay between
N8 and N12 per KWH.

Subsidy provisions

To
reduce the impact of regular tariff adjustments envisaged under MYTO on
consumers within the low income bracket, government resolved to make
annual provisions for subsidy to take care of the difference in the
tariff template.

In
the 2009 budget, about N40.31billion was appropriated for the scheme,
as against a provision of N65.78 billion last year, and an allocation
of N67 billion in the 2011 budget.

Though
the major review of tariffs under the MYTO scheme designed to help
reduce some of the risks associated with high electricity price for
consumers and investors in the industry was to have fallen due in 2013,
NERC recently brought the deadline forward from 2013 to 2011 in order
to incorporate other sources of electricity generation, considering
recent major policy decision in the section.

The
MYTO review involves a number of stages, including the ongoing data
collection from relevant agencies, valuation of existing industry
assets liabilities, and consultations.

“These critical regulatory processes are ongoing. NERC expects that
these processes will culminate in the publication of a new MYTO by the
beginning of second quarter of 2011. It is, therefore, presumptuous at
this time to suggest what the tariff will be,” Mr. Amadi said.