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Tag: electricity tariffs

  • BREAKING: NERC approves electricity tariffs hike with burden on FG

    BREAKING: NERC approves electricity tariffs hike with burden on FG

    The Nigerian Electricity Regulatory Commission (NERC) has approved electricity tariffs hike, effective January 1 2024, following a review of the Multi Year Tariff Order.

    TheNewsGuru.com (TNG) reports Chairman of NERC, Sanusi Garba made this known on Wednesday during a routine media engagement in Abuja.

    Garba, however, disclosed that the burden of the electricity tariffs hike will be on the federal government.

    The NERC Chairman stressed the Multi Year Tariff Order review and the electricity tariffs hike are in compliance with the Electricity Act 2023.

    Garba said this was after an application for tariff review by DisCos and a public hearing on the rate review.

    The Order uploaded on the NERC website states appropriate tariffs that consumers should pay for investors to recover their operating cost.

    It also contains the federal government’s policy on ensuring that due to the cost-of-living crisis, consumers will not be made to pay higher than prevailing rates.

    Cost of living crisis: FG to continue electricity subsidy – NERC

    Mr Sanusi Garba, Chairman, NERC, says the federal government will continue to subsidise electricity to ease the financial burden on Nigerians due to economic challenges in the country.

    “Government has decided for now, arising from the cost of living crisis and so many others, to in the meantime continue to subsidise electricity.

    “In the new tariff order just published by the commission, you will discover that tariff is not going up but you will see what the Electricity Distribution Companies (DisCos) should be charging.

    “You will also see in the tariff order the amount of subsidy the government will be providing to cover the gap between what they will charge and what they are allowed to charge,” he said.

    According to him, the new tariff contains what the DisCos are allowed to charge based on government policy, if they are to remain in service.

    He said that in the tariff, NERC included some provision that would ensure that the DisCos pay what they are obligated to pay.

    “The DisCos are in the business of buying electricity from the Nigeria Bulk Electricity Trading Company (NBET), so they are to pay,” he said.

    Garba said that the Electricity Act that was signed by President Bola Tinubu in 2023 presented an opportunity for states to make laws and take charge of providing electricity in their franchise areas.

    He said that the commission remained committed to working with the states in such a manner that the existing public utilities were nurtured to provide services to Nigerians and were utilised for what they were intended for.

    On metering, the chairman said that the commission had identified that the Electricity Distribution Companies had challenges with finances to meter their customers.

    He said that the rate of metering had been adversely impacted by the inability of DisCos to raise the required capital from the banks.

    “To reduce the rate of estimated billing, the commission created a framework under which the distribution companies can raise some amount of money to meter customers.

    “So we decided that from the market revenues, we set aside a fixed amount that is dedicated for the provision of metering

    “We are not saying that the money from the market on a monthly basis is the money to buy a meter.

    “It is a potential lender to raise a pathway to pay whatever loan DisCos are going to get to provide meters,” he said.

  • Ghana raises electricity tariffs by more than 18%

    Ghana raises electricity tariffs by more than 18%

    Ghana utility regulator on Wednesday said the average end-user tariff for electricity has been increased by 18.36 per cent for the second quarter of 2023.

    According to the regulator, Ghana had previously added almost 30 per cent tariff in the first quarter.

    The West African country is grappling with soaring inflation, debt, and a depreciating currency that pushed it to the brink of default.

    It has sought support from the International Monetary Fund, which is expected to approve the first loan tranche of a three billion dollars package on Wednesday.

    The Public Utilities Regulatory Commission said the tariff hike was due to the net effect of further currency depreciation, inflation, and an increase in the cost of gas.

    “Utility companies are under-covering and require an upward adjustment of their rates in order to keep the lights on,” it added, noting that the potential for outages was high.

  • Why Nigerian government must not raise electricity tariffs – World Bank

    Why Nigerian government must not raise electricity tariffs – World Bank

    The World Bank has warned the Nigerian government and other emerging economies against raising electricity tariffs, stressing that such steps will push inflation in 2022.

    The warning is contained the latest Commodity Markets Outlook forecast released by the World Bank, indicating that prices of electricity, which peaked at 80 per cent higher this year compared to 2020, will remain high next year.

    It, however, said prices will start to decline in the second half of the year as supply constraints ease.

    The bank said global inflationary pressures and potentially shifting economic growth to energy-exporting countries from energy-importing ones will define the new year.

    Ayhan Kose, chief economist and director of the World Bank’s Prospects Group said the surge in energy prices poses significant near-term risks to global inflation and, if sustained, could also weigh on growth in energy-importing countries.

    The multilateral institution said the sharp rebound in commodity prices is turning out to be more pronounced than previously projected. Recent volatility in prices may complicate policy choices as countries recover from last year’s global recession, it added.

    The bank projected that non-energy prices, including agriculture and metals, would decrease in 2022, following strong gains this year.

    In the outgoing year, some commodity prices rose to (or exceeded) levels not seen since the spike of 2011.

    The bank said natural gas and coal prices reached record highs amid supply constraints and rebounding demand for electricity, although they are expected to decline in 2022 as demand eases and supply improves.

    However, additional price spikes may occur in the near-term amid very low inventories and persistent supply bottlenecks.

    The bank has projected the price of a barrel of crude oil at $74 in 2022 as oil demand strengthens and reaches pre-pandemic levels.

    The use of crude oil as a substitute for natural gas presents a major upside risk to the demand outlook, although higher energy prices may start to weigh on global growth.

    As global growth softens and supply disruptions are resolved, metal prices are forecast to fall five per cent in 2022, after rising by an estimated 48 per cent in 2021.

    Following a projected 22 per cent increase in 2021, agricultural prices are expected to decline modestly next year as supply conditions improve and energy prices stabilise.

    John Baffes, senior economist in the World Bank’s Prospects Group, said high natural gas and coal prices are impacting the production of other commodities and pose an upside risk to price forecasts.

    Baffes said: “Fertilizer production has been curtailed by higher natural gas and coal prices, and higher fertilizer prices have been pushing up input costs for key food crops. The production of some metals such as aluminum and zinc has been reduced due to high energy costs as well.”

    The bank explained that the events of this year have highlighted how changing weather patterns due to climate change are a growing risk to energy markets, affecting both demand and supply.

    From an energy transition perspective, the bank raised concerns about the intermittent nature of renewable energy highlight the need for reliable base-load and backup electricity generation.

    The bank said: “These will increasingly need to be from low-carbon sources, such as hydropower or nuclear power, or from new methods of storing renewable power.

    “At the same time, the surge in natural gas and coal prices has made solar and wind power even more competitive as an alternative energy source. Countries can benefit from accelerating the installation of renewable energy and reducing their dependency on fossil fuels.”

    The report noted that forecasts are subject to substantial risks, including adverse weather, the uneven COVID-19 recovery, the threat of more outbreaks, supply-chain disruptions, and environmental policies.

    Furthermore, higher food prices, along with the recent spike in energy costs, are pushing food-price inflation up and raising food-security concerns in several developing economies.

    As the global shift from rural to urban living continues, the report’s special focus section explores the impact of urbanization on commodity demand. Although cities are often associated with increased demand for energy commodities (and hence greenhouse gas emissions), the report also found that high-density cities, particularly in advanced economies, can have lower per capita energy demand than low-density cities.

    It said the share of people living in urban areas continue to rise, these results highlight the need for urban planning to maximize the beneficial elements of cities and mitigate their negative impacts.

    The bank noted that cities are at the forefront of climate change, and strategic planning particularly for transport links, can help reduce their resource consumption and, crucially, their greenhouse gas emissions.

  • Why we can’t increase electricity tariff in May – Minister

    Why we can’t increase electricity tariff in May – Minister

    The Minister of Power, Engr. Sale Mamman, has dismissed rumours of a major hike in electricity tariff, clarifying there is no plan to significantly raise tariff.

    In a statement in Abuja, the Minister said instead of significant hike in electricity tariff, Nigerians should expect an increase efficiency in the sector to reduce tariffs while managing headwinds from foreign exchange and inflation.

    The clarification came amidst reports of possible major increase in the price of electricity that has dominated the public space.

    Mamman explained the order issued by NERC on the 26th of April 2021 titled “Notice of Minor and Extraordinary Review of Tariffs for Electricity Transmission and Distribution Companies” was a routine procedure.

    He said the review planned by NERC is in accordance with Section 76 of the Electric Power Sector Reform Act of 2005.

    According to him: “The tariff for customers on service bands D & E (customers being served less than an average of 12hrs of supply per day over a period of one month) remains subsidized in line with the policy direction of the Federal Government”.

    The Minister said Section 76 of the Electric Power Sector Reform Act of 2005 provides clear guidelines for the periodic review of tariff (based on market data and submissions from licensees).

    The guidelines include the provision that the Commission shall give notice of activities related to tariff “in the Official Gazette, and in one or more newspapers”.

    “The Multi-Year Tariff Order (MYTO) per NERCs regulation obtains inputs from operators in the market every 6 months to perform minor reviews and a major review is required every 5 years. Thus, as in January a minor review will occur in June. Given the timing for the Extraordinary review has also elapsed, a review will occur for consideration in January 2021,’ the statement said.

    Mamman said the Buhari administration remained faithful to the adopted resolutions from the Joint FGN-NLC/TUC Technical Committee on Electricity Tariffs which makes recommended for “NERC to conduct an extraordinary review of the MYTO to further review factors and align them with current evolving realities.”

    The reason this recommendation was posited by the Committee was to ensure that efficiencies could be derived from an extraordinary review to further reduce tariff.

  • FG delays implementation of new electricity tariffs by one week

    FG delays implementation of new electricity tariffs by one week

    The Federal Government has again suspended the implementation of the new electricity tariffs for one week.

    Recall that the government had earlier on September 28 postponed the take-off date of the tariffs by two weeks after it held a meeting with the organised labour, which was opposed to the hikes in petroleum and electricity prices.

    The new postponement was announced on Sunday during a meeting between the FG team led by the Secretary to the Government of the Federation, Boss Mustapha, and the leadership of the Nigeria Labour Congress and the Trade Union Congress.

    The parley which held at the Presidential Villa banquet hall, Abuja, adopted the resolutions of the ad hoc technical committee on the electricity tariffs hike reached on October 8 and also agreed on a work plan for the implementation.

    The parley also agreed to distribute one million meters to bridge the metering gap in the country in the first instance.

    The distribution is expected to commence this week in furtherance of the Acceleration of National Mass Metering Programme.

    The programme is expected to distribute a total of 6 million meters to Nigerians free of charge based on the funding by the Central Bank of Nigeria.

    The cost of the meters will be recovered from the electricity distribution companies.

    The meeting also agreed that the meters should be procured through local meter manufacturers and assemblers.

    Reading the communique at 11.40pm, the Minister of Labour, Chris Ngige, said, “The two-week extension for electricity tariffs which expired this week will be extended by another one week.”

    The parties agreed to reduce the tariffs by 10 percent for band A, 10.5 percent for band B and 31 per cent for band C.

  • Why Buhari allowed hike in fuel price, electricity tariffs despite COVID-19 challenges – Presidency

    Why Buhari allowed hike in fuel price, electricity tariffs despite COVID-19 challenges – Presidency

    The Presidency says in these challenging times, President Muhammadu Buhari is pushing development goals not politics and history will judge him in favourable terms in spite of criticism on social media.

    Malam Garba Shehu, the President’s Senior Special Assistant on Media and Publicity, made this known in a statement in Abuja on Sunday.

    The presidential aide was reacting to comments on the Buhari administration following upward review of the pump price of fuel and electricity tariffs in the country.

    Shehu maintained that subsidy removal in these sectors had long been foreseen by successive administrations as game changers in search of solutions to move forward with the nation’s development.

    According to him, these are reforms that are necessary and overdue.

    He said: ”To stop the mismanagement of taxpayers money, eliminate corruption associated with subsidies on petroleum products, power, fertilizer among others, the administration took the decision to implement long-delayed reforms, withdraw and allow the market to determine their prices.

    ”Blueprint upon blueprint, timeline upon timeline had come and gone but courage to take bold decisions was not there.

    ”Over the last few days, one claim acquiring a potent resonance with the online community, sections of the labour movement and the opposition is that the actions are ill-timed and ill-advised.

    ”There is nothing new in the fact that the country is today fighting multiple challenges along with COVID-19, including low earnings, near-collapse of the oil market, floods, threats of terrorism and banditry but the challenges notwithstanding, a good government must take decisions for the people’s good.

    ”As President, Muhammadu Buhari takes these difficult decisions, both popular and unpopular and as a leader because he is demonstrating the right courage to take such decisions as they become necessary in view of present circumstances.”

    The presidential aide expressed the hope that history would remembered Buhari as the president who embarked on transformation of the nation economy for the general good of the citizens.

    He stated that the ongoing reforms in the energy as well as oil and gas sectors would eliminate all the evils of corruption embedded in the sectors.

    He, therefore, stressed the need for all well meaning individuals, civil society groups and labour movements to support the president’s bold initiatives to transform the economy for the betterment of all citizens.

    ”History will be kind to President Buhari because in addition to his amazing ability to command votes, he will be remembered as the President who made real contributions to economic and overall national development by eliminating the evils of corruption embedded in subsidies.

    ”In any democracy, the most important certificate in governance is acceptance by the people and, with the support of ordinary Nigerians, President Buhari has shown a rare determination to carry out the bold initiatives as these ones driven by nothing other than the greatest good for the greatest number of people.

    ”In carrying out the reforms, the President needs the support and understanding of all citizens, inclusive of the opposition parties, the labour movement and civil society groups,” he said.

  • Planned Hike In Electricity Tariffs: NASS leadership says No!

    Planned Hike In Electricity Tariffs: NASS leadership says No!

    Disturbed by the economic hardship an increase in electricity tariffs will cause, leadership of the National Assembly on Monday waded into the controversy and declared that it will be out of place to carry out such an exercise this period.
    In a meeting with all the critical stakeholders on the planned hike in electricity tariffs from July 1st, 2020 NASS leadership succeeded in convincing the Distribution Companies(DISCOs) to defer the plan till the first quarter of 2021.
    The President of the Senate, Ahmad Lawan, the Speaker of the House of Representatives, Femi Gbajabiamila and other principal Officers of the two Chambers met at the National Assembly with the Chief Executives of the government electricity regulatory body and DISCOs across the country.
    Also in attendance were the Chairmen of the Committees on Power from the Senate and House of Representatives.
    The National Assembly leaders were emphatic at the meeting that the timing of the planned hike was wrong even though they had not much issue with the need to introduce a cost reflective tariffs for the power sector to attract the much needed investment.
    In the course of the meeting, the DISCOs too admitted that they were not well prepared for the planned hike in tariffs even though they so much desired the increase.
    The meeting agreed to defer the planned hike till first quarter of next year while the leadership of the National Assembly promised to meet with President Muhammadu Buhari on the issue.
    “The agreement here is that there is not going to be any increase in the tariffs on July 1st,” Lawan said at the end of the meeting.
    “The Speaker and I, we are going to take appropriate action and meet with the President.
    “We are in agreement here that there is no question on the justification of the increase but the time is simply not right and appropriate measures need to be put in place
    “So between now and the first quarter of next year, our task will be to work together with you to ensure that we put those blocks in place to support the eventual increase in tariffs,” Lawan said.
    Lawan said the government has been doing a lot as part of its obligations to provide some form of Intervention.
    “I’m quite aware that for this year, probably starting from last year, over N600 billion was earmarked for this sector to improve.
    “The potential increase in the tariffs is definitely something that will be of concern to us in the National Assembly.
    “There is too much stress in the lives of Nigerians today and indeed across the world because of the challenges imposed by COVID-19 pandemic and even before then, we had issues that would always make it tough for our people to effectively pay the tariffs.
    “One way or the other, for this business to flourish, for this sector to be appropriately fixed, for it to attract investment, something has to give way, there is no doubt about that but it is also crucial that we look at the timing for any of our actions,” Lawan said.
    In the same vein, Rt. Hon. Gbajabiamila said the National Assembly is on the same page with the DISCOs on the issue of cost reflective tariffs.
    “There is time for everything. A well intended programme or policy of government can fall flat on the face and never recover if you do it at a wrong time. I think we all agree to that.
    “There cannot be a time as bad as this for us to increase anything. Forget about electricity, anything. Whereas, even in time of decreasing revenue, we are even reducing the pump price. I don’t know how we can justify an increase in the cost of electricity at this time in Nigeria.
    “The good things is that we have agreed that we need to do something about the cost,” the Speaker said.
    Gbajabiamila posed some questions to DISCOs and the Nigerian Electricity Regulatory Commission(NERC): “How did we arrive at the tariffs or costs. Who were the stakeholders that were present. What was the role of the National Assembly. More importantly, is the President aware of this because the President is perhaps the biggest stakeholder of all, apart from the Nigerian people.
    “Whatever will affect his government is something that should concern all of us. I think this will affect his government. This timing. Not the increase. The timing. I think it will affect his government and if it is going to affect his government, we should all rally around our people, our president and the government to make sure we do the right thing,” Gbajabiamila said.
    The representatives of the DISCOs said if the planned hike is eventually deferred till next year, the government should continue to bear the difference in the present tariff and what was considered as the appropriate tariff.
    In attendance at the meeting were the representatives of NERC, Kano Electricity Distribution Company, Ikeja Electricity Distribution Company, Kaduna Electricity Distribution Company and Eko Electricity Distribution Company.
  • PDP attacks Buhari’s govt over increase in electricity tariff

    PDP attacks Buhari’s govt over increase in electricity tariff

    The Peoples Democratic Party, PDP, rejected the over 200 percent increase in electricity tariff announced by the President Muhammadu Buhari-led administration.

    PDP described the decision as “draconian” and completely against the interest and wellbeing of Nigerians.

    A statement by PDP’s spokesperson, Kola Ologbondiyan on Sunday charged the Federal Government to immediately rescind the obnoxious and provocative policy and consult further with Nigerians before any such tariff hike.

    PDP described the increase in electricity tariff as a furtherance of the fleecing of Nigerians, who are already overburdened and groaning under the weight of high costs, economic repression and heavy taxes foisted by the insensitive APC administration.

    The statement reads: “It is lamentable that Nigerians, who are already suffering the devastating negative impact of the recent increase in the Value Added Tax (VAT) from 5 percent to 7.5 by the APC administration, are now being
    further suppressed with increased electricity tariff.

    “Our party holds that the increase in electricity tariff, under the prevailing harsh economic conditions, is injurious to the wellbeing of Nigerians as it will further stress the productive sector and lead to an upsurge in the cost of regular and essential goods and services, including food, medicine, housing, education and other critical needs.

    “This APC policy, if allowed, will worsen the suffering of Nigerians as it will put more stress on already overburdened families, cripple businesses, result in job losses and exacerbate the prevailing frightening unemployment rate under the Buhari administration.

    “Moreover, the PDP invites Nigerians to note that this toxic and distasteful “new year gift” by the APC administration, at a time Nigerians are coming back from yuletide festivities, shows that the APC is indeed unfeeling, insensitive and have no iota of regard for the
    sensibilities and wellbeing of our citizens.”

    PDP insisted that any administration that has the interest of the people at heart should provide alternatives or hold consultations with the people before imposing such harsh tariff on its citizenry.

    The party therefore urged the “National Assembly to rescue Nigerians from such draconian policy by deploying its statutory legislative instruments to call the Federal Government to order in the interest of our nation.”

  • FG orders increase in electricity tariffs

    ELECTRICITY tariff is going up across the country, and this is official. The 11 electricity distribution companies (DisCos) have the mandate of the Nigerian Electricity Regulatory Commission (NERC) to effect the tariff increase from April.

    These are: Abuja Electricity Distribution Company, Benin Electricity Distribution Company, Enugu Electricity Distribution Company, Eko Electricity Distribution Company, Ibadan Electricity Distribution Company, Ikeja Electricity Distribution Company, Jos Electricity Distribution Company, Kaduna Electricity Distribution Company, Kano Electricity Distribution Company, Port Harcourt Electricity Distribution Company and Yola Electricity Distribution Company.

    Consequent upon the NERC directive, Abuja Electricity Distribution Company (AEDC) residential customers R3 will now pay N47.09 per unit as against the current N27.20, while Ikeja Electricity Distribution Company (IKEDC) customers in R3 category will pay N36.92 per unit instead of N26.50. Commercial customers C3 category will start paying N38.14 per unit instead of N24.63 and industrial customers of the IKEDC D3 category who are currently paying N25.82 per unit will henceforth pay N35.85 per unit.

    Enugu Electricity Distribution Company residential (R3) customers who currently pay N27.11 per unit will start paying N48.12 per unit. NERC said the order was pursuant to Section 32 and 76 of the Electric Power Sector Reform Act aimed at providing a cost reflective tariffs that ensures prices charged by licensees are fair to consumers.

    The commission also directed the DisCos to complete settlement of market invoices. “All DisCos are obligated to settle their market invoices in full as adjusted and netted off by the applicable tariff shortfall,” NERC said, adding: “In the determination for compliance to the minimum remittance threshold in this Order, the commission shall consider verified receivables from MDAs for the settlement period and DisCos’ historical collection efficiency for MDAs.

    “The commission shall hold the TCN responsible for deviation from the economic dispatch Order that adversely impact on the base weighed average cost of the wholesale of energy.” NERC last approved an upward review of tariff in July. The commission said the tariff adjustment was based on the relevant data it obtained from the Central Bank of Nigeria (CBN) and National Bureau of Statistics (NBS) such as average monthly inflation rate of 11.3 per cent, exchange rate of N309.97.

    It also added that it obtained its data on inflation rate from the US rate of inflation, which projected 1.8 percent for the period of January to October 2019. It said that all DisCos are “obligated to settle their market invoices in full as adjusted and netted off by the applicable tariff shortfall.” It added:”in the determination for compliance to the minimum remittance threshold in this Order, the commission shall consider verified receivables from MDAs for the settlement period and DisCos’ historical collection efficiency for MDAs.

    “The commission shall hold the TCN responsible for deviation from the economic dispatch Order that adversely impact on the base weighed average cost of the wholesale of energy. All FGN intervention from the financing plan of the PSRP for funding tariff shortfall shall be applied through NBET and the MO to ensure 100 percent settlement of invoices issued by market participants.

    Under this framework, the minimum market remittance by AEDC is determined after deducting the revenue deficient arising from tariff shortfall from the aggregate NBET and MO market invoices. AEDC shall be availed the opportunity to earn its revenue requirement only upon fully meeting the following obligations and subject to efficient operations.”

    The increase in tariff is coming at a time the majority of Nigerians are displeased with the poor and epileptic supply from the Discos. The national grid collapses at will, disrupting socio-economic activities.

    Many households cannot afford to store food items in freezers while commercial and industrial companies spend huge sums to generate their own power, resulting in high production costs. Only last week, residents of Yenagoa stormed the streets to protest a blackout that left them without electricity for about 10 days.