Customers of electricity all around the nation have stood against the discreet and surreptitiously power rate hike by the electricity distribution companies, which they described as “a perfect robbery” amidst the deteriorated economic realities in Nigeria. Several residents continue to lament the rate hike saying that the electricity tariff has now increased to N72.2 per unit from the previous N66, a higher price for poorer services. At the same time, some other residents expressed concerns about how the electricity distribution companies did not inform the general public before increasing the power rates.
In response to this, Abuja Electricity Distribution Company has stated on its official Twitter page that the recent rate hike was in accordance with the order of the Nigerian Electricity Regulatory Commission (NERC). On its website, the commission stated that one of their primary functions, as contained in Section 32 (d) of the Electric Power Sector Reform Act, 2005, was to ensure that the prices charged by licensees were fair to customers and sufficient to allow the licensees to finance their activities and obtain reasonable profit for efficient operations.
All inputs are evaluated with stakeholders once every five years.
Moreover, In accordance with its mandate from Section 76 of the EPSR Act 2005, the commission established a methodology for determining electricity tariffs in the Nigerian Electricity Supply Industry and subsequently issued a tariff order called the Multi-Year Tariff Order that sets out tariffs for the generation, transmission and distribution of electricity in Nigeria. The Multi-Year Tariff Order establishes a tariff framework for the Nigeria Electricity Supply Industry (NESI) that would last for 15 years, subject to annual, minimal revisions.
As such, the Multi-Year Tariff Order’s stated goal is to establish rates indicative of actual costs, ensuring that the electricity industry has the resources it needs to operate effectively. All inputs are evaluated with stakeholders once every five years, and reviews are conducted every time a significant change occurs in a slight set of indicators such as inflation, interest rates, currency rates, and generating capacity. Meanwhile, the tariff increase was first observed on the Tariff Band A Non-MD, which was increased from N57.55 per unit in December to N68.2 per unit.
The latest tariff increase was consistent with the Multi-Year Tariff Order.
According to a report, the increase on the Tariff Band A Non-MD is estimated to be about a 19 percent increase in tariff. Uket Obonga, national secretary of Nigeria’s electricity consumer advocacy network, responded by saying the latest increase in power tariffs was consistent with the Multi-Year Tariff Order. He indicated that the electricity distribution business has transitioned to a new pricing regime effective January 1, 2023, which he confirmed on his meter by purchasing units.
When he confirmed the hike, Obonga pointed out that although it follows the guidelines set out in the Multi-Year Tariff Order 2020, there have been other arbitrary increases that have been different from it. NERC Chairman Sanusi Garba also noted during a media conference that adjustments would be made to the rate every six months to monitor and manage the foreign currency component of expenses and inflation. Even still, he cautioned that with the naira’s continuous depreciation, the rate adjustment might not represent an increase.
Nigerians are concerned about the economy and privatization.
Similarly, power distribution companies in the country have also justified the recent increases as a necessary effect to ensure the electricity industry is in optimal operation, reflecting the current economic realities in the country. Meanwhile, Nigerians are concerned about the country’s deteriorating economy and the privatization of the electricity distribution business. The power distribution is believed to have deteriorated since the privatization of energy distribution, prompting calls for the government to revert to the power sector privatization.