3 December 2012

Nigeria: Amadi - NERC Not Disposed to Review of Electricity Tariff Now

Photo: Vanguard
Electricity in Nigeria

The Chairman of the Nigerian Electricity Regulatory Commission (NERC), Dr. Sam Amadi, has said that the commission has no plans to conduct a downward review of any aspect of the newly-introduced electricity tariff as was recently disclosed by one of its commissioners.

Amadi, who spoke at the sidelines of a workshop on investment prospects in gas to power organised by the commission in collaboration with the United States International Development agency (USAID) alongside the National Association of Regulatory Utility Commissioners of United States (NARUC) in Lagos, stated that there was no need for any review of electricity tariff as contained in the Multi Year Tariff Order (MYTO-2), which was launched in June 2012.

He noted that the issue of downward review of the tariff was uncalled for given that the new tariff regime came into force less than six months ago.

The commission's Executive Commissioner, Government and Consumer Affairs, Dr. Abba Ibrahim, was recently quoted to have said that NERC had started the process of reviewing downward the MYTO-2 tariff in favour of small scale businesses that had complained of its effect on their businesses.

Amadi however said: "There are no tariffs for SMEs. Tariff is tariff and there are different customers. You don't review tariff piecemeal. There are reviews that the MYTO talked about; bi-annual minor review. That has to do with changes in inflation, exchange rates, and may be the cost of gas. That is about the minor review and not group or sectional review."

He explained that the MYTO was still being tested, with the feedbacks from consumers, adding that the commission had recently discovered such challenges ranging from incidences of wrong classification, illegal billing that are not in consonance with the tariff as well as improper implementation by the various Power Holding Company of Nigeria (PHCN) electricity distribution companies (DISCOs).

"The argument about reducing tariff does not arise. The tariff was set on clear benchmarks. If we have evidence or new owners come in which is why we are doing a rate review regulation orvariation which allows utilities to make application for rate review with evidence, then we will consider it.

There is no reducing of tariff at this stage. What we are doing now is collecting evidences; look at the market, monitoring performance in enforcing the tariff order," Amadi said.

He further stated that the MYTO-2 may not have resulted to immediate supply of electricity to Nigerians on a 24 hours per day basis but would surely unlock the potential of the sector which would then bring about the needed investment in the long term.

The NERC boss identified the granting of loans to finance power projects by international finance corporations largely funded by Nigeria as one of the major breakthroughs of MYTO 2.

He explained: "Before now, such finances could not be accessed due to uncompetitive pricing of the electricity tariff in Nigeria. The gas to power conference was meant to provide a platform for the commission's staff to understand the dynamics of the gas market with a view to designing the best way to pass the cost of same to the electricity consumers for an optimum power sector."

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