Nigeria: NERC Orders Distribution Companies to Increase Tariffs

The Nigerian Electricity Regulatory Commission (NERC) has ordered electricity distribution companies to increase tariffs, effective January 1, 2021. This order was issued on December 31, 2020, and was signed by NERC Chairman Sanusi Garba.

This order follows an earlier order issued in August to increase tariffs starting September 1, 2020, which was followed by threats of strikes and suspension of the tariff. Following that suspension, the Federal Government (FG) and the Labour Congress agreed to provide tariff relief of N10.20 per kilowatt-hour for Nigerians for the next three months and also to distribute six million free meters across the nation.

The January order has also resulted in some protest and confusion among power users. Some have reported that the NERC had approved a 50 percent tariff hike from the rate agreed with Labour in October, 2020. Consequently, the NERC in a statement released on its Twitter page, debunked the rumors, saying that no approval had been granted for a 50 percent tariff increase in the January order.

According to the statement: “The tariff for customers on service bands D and E – customers being served less than an average of 12 hours of electricity supply per day over a period of one month, remains frozen and subsidized in line with the policy direction of the FG.

In compliance with the provisions of the ESPR Act with the nation’s tariff methodology for biannual minor review, the rates for service bands A, B, C, D and E have been adjusted by NGN 2.00 to NGN 4.00 per kWh to reflect the partial impact of inflation and movement in forex.”

The statement by the commission implies that all customers will see their tariffs increased regardless of the service band, unlike in the previous order, where tariff class D and E did not increase. Customers on tariff class A, B, and C will see their tariff go back to the rates published in the tariff order released on 1 September 2020, while customers in tariff classes D and E will see their tariff increase, although not to the levels originally published in the September 2020 tariff order.

While the NERC confirms that the tariff has been increased, it explains that prices have not been hiked by 50 percent, as stated by some news sites. However, many customers have complained on the Commission’s official Twitter that the distribution companies have increased their prices beyond the levels ordered by the NERC.