Nigeria Considers Fresh Electricity Tariff Hike

power
power

There are indications that electricity tariff may be raised around

mid-year as government considers options to revive the ailing power

sector by injecting $7.6 billion (about N2.4 trillion) in five years.

The details are contained in the Power Sector Recovery Plan (PSRP), a

document formulated in March by the Office of the Vice President and

the World Bank Group.

The Working Group for the implementation is being coordinated by the

SSA to the President on Power at the Office of the VP, Damilola

Ogunbiyi, and the Lead Energy Specialist at WBG, Kyran O’Sullivan.

According to the document the federal government plans to recover the

$7.6bn fund by way of hiking the present electricity tariff outlined

in the Multi-Year Tariff Order (MYTO) 2015.

It has therefore considered four options and the Working Group is

making a decision on which of the hike options to adopt shortly.

The first tariff hike option is to freeze tariffs for all classes of

electricity customers until July 2019. Although the present

administration may have left office then, government still believes

this decision will help it recover the N2.4trn ($7.6bn) it is sinking

into the sector from now to 2021.

Option B of the PSRP is to hike tariffs for all classes of customers

by January 2018. This it said will fetch about N1.7trn (about $5.4bn)

of the fund to be spent in the 5-year period. However, a balance of

$2.2bn (N697.4bn) may not be recovered within the period.

 

The third tariff hike option which is the most urgent is to increase

tariffs in July 2017 (two months from now). This decision if taken

will fetch the federal government about N1.3tr ($4.1bn) to support the

sector in the 5year period. Government may still have to contend with

recovering $3.5bn (N1.1trn) balance.

The fourth option is to hike tariffs by 50 per cent in July 2017 for

industrial customers only. The non-vulnerable residential and low

commercial customers will see the hike by January 2018 while the

vulnerable ones (customers in the lowest class) will see a hike by

July 2019. Government believes taking the decision could raise N2.3tr

($5.9bn), leaving a balance of $1.7bn (N538.9bn).

Meanwhile, the Nigerian Electricity Regulatory Commission has said

that the 198 days required for new buildings to be connected to

electricity will be reduced to 30 days.

This was part of the decisions at the 15th monthly meeting of the

Minister for Power, Works and Housing, Mr. Babatunde Fashola, with

operators of the power sector in Jos, Plateau State.

A communique issued at the end of the meeting said that NERC would

soon release a regulatory order to that effect.

It also reported that the 132kv lines from Makeri to Pankshin in

Plateau State to Okpella in Edo State were expected to be switched on

in August.

The communique said the Katampe 60 MVA substation had been restored,

while the 40 MVA mobile substations in Damboa in Borno State had also

been restored on May 7. It decried the lack of corporate governance by

Discos, which failed to provide audited accounts and improved

services.