A Review of the Nigerian Energy Industry

Nigerian Govt plans electricity tariff review by January, 2012

13 September 2011, Sweetcrude, Lagos- The Nigerian governmnet plans a major electricity tariff review that will come into effect in January next year.

It will be the climax of the goverment’s ongoing reform programme for the power sector aimed at bringing in private hands into the sector long dominated by governmnet and its agencies.

The Nigerian Electricity Regulatory Commission (NERC) Commissioner in charge of Government and Consumer Affairs, Dr. Abba Ibrahim, dropped the hint on the proposed tariff review at a workshop for estate developers and residents in Lagos.

He said the review had become imperative to enable inflow of private sector investment into the sector.

But, he said the amount by which the tariff would be increased is yet to be determined as the variables that would be used to decide the increase are still being put together.

Part of the key input that would determine the level of increase, he noted, is knowledge of the proper value of the existing assets of the Power Holding Company of Nigeria (PHCN) marked for privatisation and its operational expenditure.

In view of this, he said the commission has begun an evaluation of power infrastructure (generation and distribution assets).

Further justifying the tarriff review, Ibrahim said it is in line with the Multi-Year Tariff Order (MYTO). MYTO is a tariff pack, which is designed as a five-year tariff arrangement that enables the commission to carry out a minor review of electricity tariff yearly. The review is premised on the level of inflation and exchange rate.

The commission had announced tariff increase, which took effect from July 1, this year and shot up tariff from N8.50 to N110 per kilowatt hour (kw/h).

“Power generation is a long term business and we have a tariff pack in the Multi-Year Tariff Order (MYTO), which is designed as a five-year tariff pack and every year, we do a minor review of that tariff,” he said.

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