The Nigerian Electricity Regulatory Commission (“NERC”) has approved revised electricity rates, stating the increase would only affect customers classified under Band A service category (about 15% of the customer population); a class which, according to the commission, through empirical service data, have been confirmed to have truly received the committed level of service.
Under the revised tariff Order issued by the Commission, DisCos are under an obligation to provide customers classified under Band A service category a minimum average supply of 20hrs/day measured over a period of one week.
All other customers under Band B to E service category and representing 85% of customers population would not be affected by the current review of end-user tariffs. All DisCos have been provided with mandatory targets for investments and migration of more customers to Band A service category. With the newly approved tariffs, subsidies for the 2024 fiscal year are expected to reduce by about NGN1.14 trillion in furtherance of the Federal Government’s realignment of the subsidy regime.
This move indicates a shift in policy by the Federal Government of Nigeria towards introducing a more targeted subsidy regime aimed at mitigating the impact of changes in macroeconomic parameters while largely protecting vulnerable customers and fostering investments targeted at providing efficient service delivery in the Nigerian Electricity Supply Industry (NESI).
Pursuant to this decision, the Commission notes that it had conducted a thorough review of the tariff applications submitted by the eleven (11) successor electricity distribution companies in line with the processes established in NERC’s regulations and Business Rules.
The review process was preceded by an analysis of the Performance Improvement Plans of the licensees and included a public hearing during which interested stakeholders and intervenors examined the rate filing submitted by the public utilities. The overarching objective of the Commission in the consideration of the tariff application is the creation of a financially sustainable electricity market providing adequate and reliable power supply to drive the Nigerian economy.
The commission has however assured Nigerians, especially customers under Band A of a robust monitoring and evaluation framework as well as a review process
