A Review of the Nigerian Energy Industry

Residential consumers won’t enjoy 50% electricity tariff reduction – NERC

Electricity meters
Electricity meters

*As agency clarifies position on tariff reduction, insists it’s not political 

Oscarline Onwuemenyi 
28 March 2015, Sweetcrude, Abuja – The Nigeria Electricity Regulatory Commission (NERC) has stated that electricity consumers in the residential cadre of it’s tariff structure will not benefit from the removal of the collection loss component factored into the Multi-Year Tarrif Order (MYTO 2.1).
The Chairman of NERC, Dr. Sam Amadi, who stated this at a forum of electricity consumers in Abuja, explained that because the recent tariff increase for residential consumers in R1 and R2 categories was frozen and would not take effect until June, consumers in that class would not enjoy the latest reduction which saw electricity charges decrease by an average of 50 per cent.
According to Amadi, the recently announced planned reduction in tariff affects mainly commercial and industrial consumers.
But the NERC boss would not explain why, despite the agency’s position that tariff for residential consumers was frozen, there has been an indiscriminate increase in the electricity bills for millions of consumers across the country.
He noted that it is not certain that residential consumers were actually affected by the increase in the first place. “Some consumers are saying, that since it is 50 per cent my bill will now be divided by 50 per cent. It is not that.”
“Recall that the consumer increase has been rescheduled, it was frozen until June and that means the increase we did in January, residential consumers were not paying that increase.
“So, they will not see any reduction today because they were not actually paying. So, the decrease will not show.
“But other commercial and industrial consumers will see by next month (April) those decreases,” he added.
While announcing the removal of collection losses almost two weeks ago, Amadi had observed that, “It is the responsibility of the Discos to collect their revenue from their customers.
“Failure to do so should not be a penalty to customers who pay their bills. It is clear that removing the collection losses will lead to lower tariffs for consumers.”
He also noted that, “The removal of collection losses from customer tariff has reduced tariff by more than 50 per cent in some places.
“Please note that the reduction does not affect the CBN facility and its repayment.”
But clarifying it’s import residential consumers, he added that these classes of consumers will not see any reduction in the electricity bills.
“In many places the tariff reduction was more than 50 per cent, some are about 50 per cent but in some places like Enugu where before the new order it was over 80 per cent increase, it was slashed down to about 30 per cent, which gives more than 50 per cent,” Amadi said at the meeting.
He added that, “In some other places like Eko and Ikeja it could be less than 30 per cent. We said on the average, and it was not like 50 per cent blanket reduction. It was a reduction that varies according to what impact the collection loss had on the tariff.”
The NERC boss also explained that the reduction had no political under tone as it was a result of a petition sent to it by the Manufacturers Association Nigeria (MAN).
“The order that NERC made is not political. We followed due process of our commitment to listen to consumers and other stakeholders based on the issues raised before us.”
Amadi added that, “The issues were raised and we responded following our process.
“We always try to listen to complaints from consumers. Our job is to keep the playing field level. That means if operators complain we listen as well and we try to review all issues.”
“The rule says within 60 days anybody can petition to have us review our order. We want to see ourselves as responsible, responsive and accountable regulator, especially to consumers,” he noted.
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