A Review of the Nigerian Energy Industry

Power firms justify increase in tariff

Power transformer02 June 2014, Abuja – Investors in the power firms have justified the June 1, 2014 increase in the electricity tariff announced by the Nigerian Electricity Regulatory Commission.

They said electricity consumers would have been asked to pay far higher than what was announced by the commission if not for the reduction in the wholesale price of power generated.

The chief executive officers of the electricity generation and distribution companies told our correspondent in separate interviews on Sunday that the NERC had to cut down the price of wholesale energy.

This, they said, was in order to forestall unbearable increase in electricity tariff by the consumer.

Widespread criticisms had greeted the announcement of the increase in electricity tariff.

The Trade Union Congress had argued that an increase in the tariff, despite poor power supply, would give credence to the belief that the government was seeking to impoverish Nigerians.

But speaking on the development, the CEO of a Genco said, “I don’t know how NERC did its calculation because we were negatively affected by the tariff review. Actually, for the Gencos, it is a decrease for the NERC reduced our wholesale price and increased that of the distribution firms.

“On the Discos side, they increased the rate. But on the Gencos side, they reduced our rate. Their argument is that to reduce the total amount of the increase that the customer will have to bear, they have to reduce our wholesale price.

“If they had increased our own, it means that what the customer would be paying will even be more than what was announced. So, the new tariff was done to benefit customers and not the power companies as some people think.”

The CEO, who spoke on the condition of anonymity, said the Gencos were still contesting the reduction in the wholesale energy price.


– The Punch

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