…DisCos begins 60% tariff collection H1, 100% H2
OpeOluwani Akintayo
Lagos — The federal government through the Nigerian Electricity Regulatory Commission, NERC has announced another increment in electricity tariffs within a space of two months.
The MYTO order containing the tariff hike, Order NERC/225/2020 was signed by the new Chairman of NERC, Sanusi Garba.
The approved minor tariffs review document for Ibadan DisCos obtained by SweetcrdueReports revealed that electricity distribution companies will commence collection of 60 percent tariffs in the first half of the year, with collection rising to 100 percent in the second half of the year.
According to the document implementation of the minor tariffs expected to commence this January, is expected to run throughout 2021 and beyond.
From the document, NERC explained that the minor review was arrived at after considering the impact of inflation rates (Nigerian and USA), foreign exchange rate (naira/dollar), gas prices, available generation capacity and material variances to the accompanying CAPEX and OPEX required for evacuation and distribution of available generation capacity- (14.9 percent inflation rate rise in November 2020 and foreign exchange of N379.4/$1 as of December 29, 2020).
Other parameters for increment as stated by NERC include increment in gas prices, available generation capacity and others.
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The federal government through NERC had implemented a hike in November 2020, causing widespread opposition.
Electricity consumers are expected to pay between N59.7-N46.5 per kilowatt in the first half, and N57.1 per kilowatt in the second half of this year.
However, while collection would lead to a tariff shortfall of about 40% for the DisCos in the first half, the utility firms would begin full tariff collection by second half.
Parameters for the minor review:
| Parameter | Unit | 2020 | Jan-June 2021 | July-Dec 2021 |
| PA Effectiveness | PA Year | 4 | 5 | 5 |
| Loss Target | 4 | 23.1% | 18.6% | 18.6% |
| Nigerian Inflation | % | 13.1% | 14.9% | 14.9 |
| US Inflation | % | 1.2% | 1.2% | 1.2% |
| Exchange rate N/$ | % | 360.8 | 397.4 | 397.4 |
| Energy Delivered to DisCo | Naira | 4, 015 | 4, 556 | 4, 917 |
| Energy Delivered to DisCo | GWh | 458 | 520 | 561 |
| Generated Cost | MWh/h | 24.9 | 27.1 | 26.5 |
| Transmission & Admin cost | N/kWh | 4.8 | 6.5 | 6.1 |
| End-user Allowed Tariff | N/kWh | 56.9 | 59.7 | 57.1 |
| End-user Allowed Tariff | N/kWh | 34.1 | 46.5 | 57.1 |
| Tariff Shortfall | N000,000 | 70, 501 | 24, 521 | 0 |
| Minimum Remittance 2020-2021 | % | 29.4% | 60.31% | 100% |
| Cumulative tariff shortfall 2015-2020 | N000,000 | 322, 268 |
Tariffs implication:
| Tariff class | Jan-Jun 2021 | Jul-Dec 2021 | 2022 | 2023 | 2024 |
| Life-line (R1) | 4.00 | 4.00 | 4.00 | 4.00 | 4.00 |
| A-Non MD | 62.33 | 69.18 | 73.11 | 74.22 | 74.12 |
| A-MD1 | 61.33 | 68.13 | 71.67 | 71.99 | 72.54 |
| A-MD2 | 59.70 | 61.86 | 65.05 | 65.35 | 66.04 |
| B-Non MD | 58.39 | 66.04 | 69.47 | 70.91 | 69.65 |
| B-MD1 | 57.33 | 64.99 | 68.36 | 68.69 | 68.54 |
| B-MD2 | 56.33 | 58.72 | 61.74 | 62.05 | 62.69 |
| C-Non MD | 48.71 | 62.90 | 64.02 | 67.59 | 66.30 |
| C-MD1 | 47.99 | 61.86 | 62.91 | 65.37 | 63.80 |
| C- MD2 | 46.91 | 55.58 | 58.43 | 58.72 | 59.33 |
| D-Non MD | 26.97 | 59.76 | 58.50 | 64.26 | 60.70 |
| D-MD1 | 44.03 | 58.72 | 57.40 | 62.05 | 59.58 |
| D-MD2 | 44.03 | 52.44 | 55.12 | 55.40 | 55.97 |
| E-Non MD | 26.97 | 31.81 | 33.53 | 33.66 | 34.02 |
| E-MD1 | 44.03 | 42.18 | 44.46 | 44.63 | 45.11 |
| E-MD2 | 44.03 | 47.52 | 50.09 | 50.28 | 50.82 |
According to the electricity market operator, NERC, the increment is a transition to cost-reflective tariffs and introduction of service-based tariffs regime with a view to improving customer service experience as well as ensuring financial sustainability of the Nigerian Electricity Supply Industry, NESI.
