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FG REDUCES ELECTRICITY TARIFF BY OVER 50% WITH DAYS TO PRESIDENTIAL POLL

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 The federal
government of Nigeria has reduced electricity tariff by over 50% with just days
to the presidential elections, which is expected to be keenly contested between
the incumbent President Goodluck Jonathan and main challenger, General
Muhammadu Buhari of the All Progressives Congress (APC).
Announcing the
new tariff Tuesday, the Chairman/CEO of the Nigerian Electricity Regulatory
Commission (NERC), Dr. Sam Amadi, said the approval followed complaints against
the increase in tariff of different consumer classes by industrial and
commercial consumers under the Manufacturers Association of Nigeria (MAN).
Electricity
tariff shot through the roof because power distribution companies were passing
on collection losses to consumers, NERC said after a review. Amadi added
that NERC invited the CEOs of power distribution companies for talks following
the complaints.

“The
Commission also invited the Chief executive Officers of the distribution
companies to the hearing to respond to the case of the consumer groups.
Furthermore, the Commission reviewed the technical and financial assumption of
MYTO 2.1. The review shows that the major underlying cause of the skyrocketing
increase in the tariff is the huge Aggregate Technical, Commercial and
Collection (ATC&C) losses, which are passed through to consumers. In some
DISCOs ATC&C losses increased tariff by as much as 80-103%.
“… It is the
responsibility of the DISCOs to collect their revenue from their customers.
Failure to do so should not be a penalty to customers who pay their bills. It
is clear that removing the collection losses will lead to lower tariffs for
consumers. The removal of collection losses from customer tariff has reduced
tariff by more than 50 percent in some places. Please note that the reduction
does not affect the CBN facility and its repayment.
“Therefore, On
Monday, March 9, 2015 the Nigerian Electricity Regulatory Commission (NERC)
issued a new order to the effect that henceforth collection loss, which is
defined as the ‘amount billed but not collected’, will not be automatically
passed on to consumers of electricity. Consequently, the collection loss for
all DISCOs is set at zero. It is now the responsibility of DISCOs to convince
the regulator of any exceptional circumstances for such loss to be passed to
the consumers,” Amadi said in a statement.
The NERC CEO
further said, “This new order now amends the MYTO 2.1 and has reduced the
tariff to be paid by all class of consumers. In the review MYTO 2.1 the
Commission followed due process and the regulatory principles. The EPSR commits
the Commission to ensuring full recovery of prudent costs for efficient
operators. The Commission is obligated to make sure that only prudent and
efficient costs are passed to consumers. The principle is to ensure that the
distribution company operates efficiently and provide quality and affordable
services to consumers.
“NERC remains
committed to the principle of cost- reflective pricing and to the development
of an efficient and financially viable electricity market. These are important
to support the investment that is needed to ensure the electricity supply
industry meets the needs of the Nigerian economy. The decision to review tariff
is completely compatible with the terms of the privatization and has been
reviewed with the Bureau for Public Enterprises (BPE). NERC and BPE are working
together to advocate for series of fiscal policies that will foster easier
access to investible capital to further increase capacity and enhance
reliability in the sector.”
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