NERC: Stakeholder Consultation on New Electricity Tariff Rates Ongoing

•Debunks purported tariff increase by July

•Faults Discos’ unauthorised communications to customers

•Consumer group threatens legal action to stop purported 40% tariff hike

Peter Uzoho

The Nigerian Electricity Regulatory Commission (NERC) yesterday disclosed that the commission was currently holding stakeholders’ consultations on a new tariff rates before it would be announced to the public.

Also, the NERC dispelled the trending speculations of about 40 per cent electricity tariff increase, which power distribution companies (Discos) had said would take effect by July 1, 2023.

The NERC specifically faulted the Discos for disseminating “wrong” and “unauthorised” communications to their customers about tariff increase from July, and for failing to get clearance from the commission before pushing such messages out to the public.

An insider source at the power industry regulator, who spoke to THISDAY, on condition of anonymity, added that no tariff increase was planned to take off in July, maintaining that the commission was still consulting with stakeholders on the matter.

This was just as an advocacy group in the Nigerian Electricity Supply Industry (NESI), All Electricity Consumers Protection Forum, has threatened to file a suit to stop the purported 40 per cent electricity tariff increase by July.

For the past one week, the media has been awash with news of electricity tariff increase up to 40 per cent, starting from July 1, 2023.

The Discos had also alerted customers under their respective networks of the purported tariff increase, citing the change in foreign exchange and the supposed tariff increase done after every six months.

However, NERC had been silent in the midst of the anxiety generated by the said tariff increase by July, while many analysts and consumers have expressed mixed reactions about the speculated increase.

But speaking to THISDAY during a telephone chat, yesterday, the NERC official, who admitted that there would be an increase, but not in July, stated that the commission has not determined what the actual tariff would be.

The official further explained that the commission had finished its calculation for new rates but still needed to consult relevant stakeholders next month before the new tariff would be announced and implemented.

He explained that electricity tariff increase was driven largely by the cost of gas for generation as well as the cost of spare parts for the maintenance of power generators, which are all paid for in dollars.

The NERC official said, “We’ve not determined how much it will be. Definitely, there will be an increase but not in July. Because of the movement of the exchange rate, it has so many impact specifically on generation. So, it’s the cost that is coming from generation that is causing it.

“So, we have a number of options to try to see how to manage it, and we’ve also asked the Discos to come too, let’s sit down and talk because it’s not something you just fix. There needs to be a way for everybody to agree how to communicate the message to the customers and then, even for the government too to be aware.

“So, you have to prepare it and package it and tell them that this is the implications. The one for fuel, everybody knew what it was right from time because from January, they had made appropriation for the subsidy. So, it was until the appropriation ran out of time that the subsidy was removed.

“But now, I think there is still some subsidy (on electricity) and on the basis of that, the commission is holding on. We’ve done the calculation actually and it’s ready to be moved but we still need to consult. There will be consultation next month.”

He also faulted the Discos for disseminating “wrong” and “unauthorised” communications to their customers about tariff increase in July and for failing to get clearance from the commission before pushing such messages out to the public.

He said the Discos also failed to explain to the consumers why there should be tariff increase, saying they only talked about foreign exchange without explaining how it impacts power generation.

The source added, “So, everything that the Discos did was wrong, it was unauthorised, it was completely wrong on their own part. And even if they had communicated, they were supposed to make the effort to communicate why tariff is going up, it’s not just to say dollar has gone up.

“People don’t earn in dollars, people earn naira. The electricity is generated here in Nigeria. So people have the right to know why there is a dollar component inside the tariff. So, you have to explain to them what is causing it and the steps.

“And the reason is that the gas that is used to generate electricity is paid in dollars, the investments people made for gas generation was made in dollars. A lot of the parts that are used to service the generators are paid for in dollars. So, that cost is what is heavily causing the tariff to go up.

“If we can have some of those local technologies here paid for in naira, if the government can also come out with a policy to ensure that all the investments made in gas supply in Nigeria is denominated in naira, then it will have less impact on electricity tariff.

“So, you can see that there is a lot of people that needs to be spoken to. People needs to agree before you pass it through to people. So, to be frank, the commission has not said anything for July, nothing is happening in July. But there will be extensive consultations in July. In fact, consultations have already started.”

Meanwhile, an advocacy group in the Nigerian Electricity Supply Industry (NESI), All Electricity Consumers Protection Forum, has threatened to file a suit to stop the purported 40 per cent electricity tariff increase by July.

The National Coordinator of the organisation, Mr. Adeola Samule-Ilori, told THISDAY in a chat, that the purported 40 per cent electricity tariff increase was a fraud and unjustifiable and that his group was preparing to take a legal action to halt the implementation of any tariff hike.

Samuel-Ilori stated, “It is not justifiable. The 40 per cent tariff increase is a fraud, it’s a scam. They have decided to scam and fraudulently take away that which belongs to the masses by force because there is no one to say it is enough.

“So, the purported electricity tariff increase is an attempt to ensure that every consumer loses his purchasing power. So, there is nothing we can do rather than to go to court and approach the court to stop it, which is what we at the All Electricity Consumers Protection Forum in which I am the National Coordinator, is planning to do.

“It is illegal and has to stop. We’re working on filing the suit. If not for the holidays that will be on Wednesday and Thursday, we even want to get an interim injunction to stop it but because of the holidays, we may not be able to achieve it. But at the end of the day, we will get an interlocutory injunction to stop it.”