Federal government increases electricity tariffs, removes fixed charges

22 Dec 2015
Chibuike Oguh

Summary

The NERC said the new tariff regime will encourage distribution companies to increase the amount and quality of electricity supply.

Dr. Sam Amadi, Chairman / CEO, Nigerian Regulatory Commission

The Nigerian Electricity Regulatory Commission (NERC) has approved a new tariff regime, which abolishes fixed charges for all classes of electricity consumers.

Under the new tariff regime, electricity consumers will now only pay for what they consume from month to month, the NERC said in a statement released on Monday. Fixed charges are components of electricity tariffs paid by consumers regardless of their consumption.

As a result of the abolishment of the fixed charges, residential consumers in the Abuja distribution area will no longer pay the N702 monthly fixed charge. However, their energy charge will increase by N9.60 kilowatt-hour (kWh).

Residential consumers in Eko and Ikeja electricity distribution areas will no longer pay the N750 monthly fixed charges. However, their energy charges will increase by N10kWh and N8kWh, respectively.

Similarly, consumers in the Kaduna and Benin distribution areas will no longer pay the N800 and N750 monthly fixed charges. However, their energy charges will increase by N11.05kWh and N9.26kWh, respectively.

"This is good news for electricity consumers who have long asked for a more just and fair pricing of electricity,” said Dr. Sam Amadi, the Chairman/CEO of the NERC, who, alongside five commissioners at NERC, will conclude their five-year tenures on December 22nd.

“The regulatory commission had promised to address all the complaints against fixed charges through a regulatory process that promotes investments in the electricity industry without unfairly burdening electricity consumers,” Amadi said.

As for commercial consumers (with C2 classification) in Ibadan and Enugu who use their residences as factory for manufacturing goods, they will no longer pay monthly fixed charges of N17, 010 and N22, 141. However, their energy charges will increase by N12.08kWh and N13.35kWh, respectively.

The NERC said the new tariff regime will encourage distribution companies to increase the amount and quality of electricity supply to target customers on a willing-buyer willing-seller basis.

“These measures are necessary to improve electricity supply across Nigeria and ensure that distribution companies are working hard to increase investment that will ensure predictable and ultimately reliable and uninterrupted electricity supply in Nigeria,” The NERC said.

The NERC also said distribution companies must now provide meters for their customers.

The commissioners whose tenures end today are: Muhammed Bello, Deputy Chairman; Steven Adzinge, Commissioner for Legal, Licensing and Enforcement; Mary Awolokun, Commissioner for Finance; and Abba Ibrahim, Commissioner for Engineering, Safety and Standards.

Chibuike Oguh is Financial Nigeria's Frontier Markets Analyst



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