A Review of the Nigerian Energy Industry

NERC reduces electricity tariff, cuts off excessive charges

17 March 2015, Abuja – Following complaints lodged by all classes of consumers in Nigeria’s electricity market: residential and industrial consumers, the Nigerian Electricity Regulatory Commission (NERC) on Tuesday reviewed the rates to be paid for electricity consumption in the country.

Dr. Sam Amadi, NERC
Dr. Sam Amadi, NERC

NERC from its consultation with various electricity consumer groups across the country, established that the skyrocketing increase in the tariff was informed by huge Aggregate Technical, Commercial and Collection (ATC&C) losses which are incurred by the electricity distribution companies (Discos) and are subsequently passed on to consumers.
It therefore reviewed the assumptions in the Multi Year Tariff Order (MYTO 2.1) and determined that henceforth, it will be inappropriate for Discos to transfer collection losses that they record and have control over to consumers.

The commission explained that its removal of collection losses from customers’ tariff has henceforth reduced tariff by more than 50 per cent in some places across the country, adding that it will lead to lower tariffs for consumers.

Its chairman, Dr. Sam Amadi said in Abuja that the Electric Power Sector Reform Act (EPSRA) and NERC’s Business Rules mandate it to review its decision at the petition of an interested party who complains within 60 days of such decision.

Amadi therefore informed that it acted with regards to complaints lodged by industrial and commercial consumers under the auspices of the Manufacturers Association of Nigeria (MAN), in which they asked for a review of the MYTO 2.1 and further requested drastic reduction in their tariff.

MAN had at the consultation claimed that such astronomical increase in tariff would kill their business and lead to massive job losses.

“Since January 1, 2015 when NERC approved the MYTO 2.1 we have received several complaints against the increase in tariff of different consumer classes.

Pursuant to these rules, the commission organised public hearing and received evidence from consumer classes on the affordability of the new tariff. The commission also invited the chief executive officers of the distribution companies to the hearing to respond to the case of the consumer groups,” Amadi said.

He then stated that: “The commission reviewed the technical and financial assumption of MYTO 2.1. The review shows that the major underlying cause of the skyrocketing increase in the tariff is the huge ATC&C losses, which are passed through to consumers. In some Discos, ATC&C losses increased tariff by as much as 80 to 103 per cent.”


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