A Review of the Nigerian Energy Industry

Understanding electricity tariffs paid by consumers

electric-meters09 January 2014, Lagos – The Nigerian Electricity Regulatory Commission, NERC, has put into operation a Multi-Year Tariff Order, MYTO, for the determination of the cost of electricity sold by distribution/retail companies for the period 1 June 2012 to 31 May 2017.

There is a specific tariff for each of the 11 electricity distribution companies, discos. The tariff covers each year of the five-year period, namely, 1 June 2012 to 31 May 2013, 1 June 2013 to 31 May 2014, 1 June 2014 to 31 May 2015, 1 June 2015 to 31 May 2016 and 1 June 2016 to 31 May 2017.The charges are in two parts, there is a fixed monthly charge and there is a charge for electricity consumption, the energy charge.

Consumers are charged in different categories, namely, residential, commercial, industrial, special and street lighting.

We give below the charges for residential consumers using single phase or three phase meters, category R2, as a large proportion of consumers fall into this group.

We will also consider the charges in respect of Benin Disco, Ibadan Disco and Ikeja Disco. For Benin Disco, the fixed monthly charge for residential R2 category is N500 in 2012 – 2013, N750 in 2013 – 2014, N1500 in 2014 – 2015, N1800 in 2015 – 2016 and 2016 – 2017.

Electricity consumption is measured in kilowatt-hour, kWh, and the energy charge is N11.37 per kWh in 2012 – 2013 and 2013 – 2014, N11.94 per kWh in 2014 – 2015, N12.54 per kWh in 2015 – 2016 and N13.16 in 2016 – 2017.For Ibadan Disco, the fixed monthly charge for residential R2 category is N500 in 2012 – 2013 and 2013 – 2014, N625 in 2014 – 2015, N781 in 2015 – 2016 and N976 in 2016 – 2017 while the energy charge is N12.30 per kWh in 2012 – 2013, N12.91 per kWh in 2013 – 2014, N13.56 per kWh in 2014 – 2015, N14.23 per kWh in 2015 – 2016 and N14.95 per kWh in 2016 – 2017.

For Ikeja Disco, the fixed monthly charge for residential category R2 is N500 in 2012 –2013, N750 in 2013 – 2014, N895 in 2014 – 2015, N1067 in 2015 – 2016 and N1273 in 2016 – 2017 while the energy charge is N12.45 per kWh in 2012 – 2013, N12.83 per kWh in 2013 – 2014, N13.21 per kWh in 2014 – 2015, N13.61 per kWh in 2015 – 2016 and N14.02 per kWh in 2016 – 2017.

We notice that there would be increases in the charges from one year to the next year and that the charges differ from one disco to the next disco.

What is important is that NERC has stated the basis used for the determination of these charges and the basis for the review of the charges.

Each of the discos came under new management towards the end of 2013 with the new management having majority shareholding and the Federal Government of Nigeria, FGN, having the minority shareholding.

There has been public disquiet about the available electricity supply since the new managements were put in place.

The discos have indicated that they are not receiving as much power as they expected to receive while there is public concern about deteriorating service from the discos.

NERC has indicated that the tariffs were fixed in such a manner that they are fair to consumers and that the tariffs are sufficient to allow the discos to finance their activities with reasonable earnings for efficient operation.

The new managements for the discos were put in place so that they can make a change in the fortunes of the discos. Limited supplies to the discos from the national grid would limit the revenues of the discos
*Akintola Omigbodun, Vanguard

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