*New electricity tariff to last for 10 years
01 February 2016, Sweetcrude, Abuja — DESPITE public outcry and opposition by organised labour against a new electricity tariff regime which is set to take effect today, distribution companies across the country have said there was no going back on its implementation.
The Nigerian Electricity Regulatory Commission, NERC, had on December 20, last year, rolled out a new tariff regime under its MYTO 2.1 for residential and industrial consumers, just as it equally abolished fixed charges.
Speaking at the weekend, the Executive Director, Research and Advocacy, Association of Nigerian Electricity Distributors, ANED, Mr. Sunday Oduntan, explained that power sector growth would have remained elusive under the old tariff structure.
He said that the old tariff was not cost reflective, hence the operations of the Discos were almost grinding to a halt before the intervention of NERC with the new tariff structure, which, he said, was the only way to ensure that they remained in business.
He said, “If you want an improved service, we have to have a cost-reflective tariff. The required huge investment cannot happen without us having an appropriate pricing. That is the issue. We have been under-selling for a long time, and you can’t be selling a product that is supposed to be N100 at N60 and people are expecting improvement; that business will collapse.
“So, it is not about us increasing tariffs, it is about reviewing the tariffs upward to meet the operational cost of the business so that we will not continue to be in darkness perpetually.”
Oduntan lamented that some Nigerians were not enlightened enough to see the good intention behind tariff review, saying any attempt by consumers and other stakeholders alike to resist the implementation, is akin to returning the power sector to dark ages.
He hinted that, contrary to the belief that tariffs will continue to escalate, consumers, he said, will begin to heave a sigh of relief from the third year of the implementation of MYTO 2.1 because tariff rates, would begin to drop, because of improvements in power infrastructure across the power sector value chain, which included; generation, transmission and distribution
And to move the sector forward, the ANED helmsman, urged those that have litigation against the implementation of the new tariff regime to have a rethink and withdraw such cases, which he described as frivolous.
He noted further that contrary to the belief that Discos were making a lot of profit without the commensurate level of service, only 25 percent of revenue generated ends up with the Discos, with generation companies taking 60 percent, transmission 11 percent and another 4 percent to NERC and Nigeria Bulk Electricity Trading (NBET).
Under the new tariff announced by NERC, R2 customers covered by the Abuja Electricity Distribution Company (AEDC) who currently pay N13.91 per kilowatt-hour (kWh) will witness an increase by N9.60.
Consumers under the Eko and Ikeja electricity distribution areas who currently pay N12.87kWh and N13.61 kWh respectively will witness a N10 and N8 increase respectively in their energy charges.
Electricity consumers covered by Kaduna and Benin Discos who currently pay N16.90 kWh and N12.54 kWh will witness an increase of N11.05 and N9.26 respectively in their energy charges.
For commercial consumers in Ibadan and Enugu who currently pay N25.18 kWh and N24.01 kWh respectively, their energy charges will increase by N12.08 and N13.35 respectively.
Meanwhile, the Minister of Power, Works and Housing, Babatunde Fashola, has said the new electricity tariff regime was the first major policy of the President Muhammadu Buhari administration.
He explained that the new energy tariff that would come into effect on Feb.1 would last for 10 years, noting that during the years, it was expected that energy tariffs must come down and the sector stabilised.