A new electricity tariff that would see the charges go high by over 40% will be rolled out from July 1, OduNews reports.
Previously, the government removed subsidies on petrol (PMS) and allowed the naira to float freely in the foreign exchange market. These changes have made it difficult for the Nigerian Electricity Regulatory Commission (NERC) to determine the new electricity prices.
Currently, the average cost of electricity is N64 per kilowatt. However, with inflation rising and expected to reach 30 per cent by the end of June, experts predict that the new average cost may jump to around N88 per kilowatt. This increase is necessary for the electricity sector to cover its expenses.
Although the power sector players have been unable to meet the threshold of supplying at least 5,000 megawatts a year after signing contracts with NERC, NERC’s current Service Based Tariff (SBT) was benchmarked on an exchange rate of N441/$ and inflation of 16.97 per cent.
Going by the NERC’s orders, in 2015, the average tariff across distribution companies (DisCos) and classes of end-users was N25 kilowatt, in order of 198/2020, which came into effect on September 1, 2020. The average tariff went to N60 per kilowatt; in the MYTO for 2022, the average tariff was N64 across classes of customers.
While NERC’s projected tariff for July 2023 was expected to remove subsidy and increase the previously frozen tariff band D and E, increasing the bands from N54.59/kilowatt to N62.16 for band D and N48.37/kilowatt to N61.16 on average with an average increase across the bands moving to N67/kilowatt, the prevailing floating of the naira and spike in inflation is projected to move the new average tariff to about N88/kilowatt for the sector to recover the cost.
At the time of filing this report, available electricity on the grid stood at 3,057.7MW from 17 power plants. The average load intake of all the DisCos in the last four months averaged 3,000MW, a development that follows the persistent push to make the DisCos meet up with 100 per cent of their remittance orders.
