Nigerians to Pay Between N111 to N215 Per Kilowatt with Planned Cost-reflective Electricity Tariff Regime

Emmanuel Addeh in Abuja

If government decides to approve the payment of cost-reflective tariffs this year, Nigerians will shell out between N111 and N215 per kilowatt hour (Kwh) of electricity as against the current N56.57 to N65.99 being spent on the same quantity of power.

A document analysing the 2024 “Business as Usual” scenario for the sector in 2024, also indicated that government will then also need to withdraw the current subsidy on power paid operators, which is expected to hit N1.65 trillion by the end of this year.

While there were rumours that by January 1, 2024, the federal government may approve a raise in tariffs, the Nigerian Electricity Regulatory Commission (NERC) has now shut down the insinuations, saying it was not aware of such a decision.

The minister of Power, Adebayo Adelabu, at a recent function in Abuja in November, stressed that President Bola Tinubu halted the implementation of a hike in electricity tariff since the impact of the petrol subsidy removal was already becoming unbearable for Nigerians.

“Tariffs should have been raised months back, but Mr President said until we are able to achieve regular and incremental power supply we can’t touch the tariff.

“For political reasons and empathy, you cannot cause additional burden on Nigerians. We just had the removal of the fuel subsidy, we are talking about the exchange rate skyrocketing, galloping inflation and so many others things that bring hardship to the people.

“Mr President is trying to relieve this hardship through various forms of palliatives. So it is not politically expedient and reasonable to now implement a tariff that is more like dumping the existing tariff,” the minister argued.

But the report from NERC breaking down what the tariff regime would look like this year, further showed that for every month in 2024, the federal government will pay a subsidy of N137.97 billion if the “business as usual” scenario prevails.

When eventually the federal government and NERC give the go-ahead, Yola Distribution Company (Disco) customers will pay the highest amount per kilowatt of electricity of N215.64, followed by Jos with N136.64 and Kaduna with N131.41. Currently, Yola, Jos and Kaduna Discos’ customers pay N65.99, N60.61 and N57.45 respectively.

The three will be closely trailed by Kano, Ibadan and Enugu Discos whose customers will spend N126.58, N126.06 and N125.85 as against the current N58.82, N62.48 and N59.04 to buy a kilowatt hour of power.

Port Harcourt customers will pay N125.77 as against the current N61.40, Benin will pay N125.19, Abuja Disco customers will shell out N122.82 while Ikeja and Eko electricity customers will pay N112.30 and N111.60.

According to the analysis by NERC, Port Harcourt currently collects N61.40, Benin collects N60.06 while Abuja, Ikeja and Eko customers pay N63.34, N56.57 and N59.49 respectively.

But if the government’s projected subsidy of N1.65 trillion on electricity is sustained in 2024, Ikeja Disco will get the highest reimbursement or subsidy of N239.41 billion for the year, followed by Abuja Disco with N221.59 billion.

Of the 11 power distributors in the country, Eko will get N187. 69 billion subsidy payment, Ibadan will get N182.72 billion, while Benin will be paid N150.09 billion during the year if the status quo remains.

Besides, Kano and Port Harcourt will receive N128.93 billion and N128.86 billion in 2024 if the federal government continues to reimburse Discos’ underpayments while Enugu and Kaduna Discos will get N125.89 billion and N123 billion subsidy payment in 2024 if there’s no raise in tariffs.

Ibadan and Yola will receive N108 billion and N57 billion as cost recovery during the period under review.

 But the report also revealed that Discos, between 2015 and 2021, a period of six years, were only able to achieve 56 per cent of their expected capital expenditure investments projections during the period. From a forecast of N465.19 billion, the power distributors were only able to put in N258.29 billion during the six years.

The data also indicated that the Transmission Company of Nigeria (TCN) only achieved just 28 per cent of its expected capex from 2013 to 2020. The wholly government-owned entity only spent N181 billion on investment in capital projects as against the projected N655 billion during the period.

By the rules, Discos after approval from NERC which are also expected to engage in widespread stakeholders’ engagement, are supposed to review the prices of electricity to account for changes in factors such as inflation, exchange rate, gas price and generation capacity.

Also, major tariff reviews are supposed to be conducted every five years, during which all inputs are reviewed in consultation with stakeholders, while the minor reviews are done bi-annually.

The minor review involves collection of actual data from the National Bureau of Statistics (NBS), the Central Bank of Nigeria (CBN) and the System Operations Unit of the TCN.

As for the metering challenge, the data showed that out of a customer population of N12.4 million, metered customers were just 5.41 million, while unmetered remained over 7 million.

Ikeja, according to the NERC data, had the most metered customers of 69 per cent, followed by Abuja and Eko with 59 per cent apiece. The least metered franchise was Yola Disco.

“Several initiatives of the commission and previous federal government mass metering programmes had resulted in the deployment of 2.4 million meters.

“Less than 10 per cent of meters installed post-privatisation, that is, approximately 212,553 meters, have been funded by the Discos,” the report stated.