21 December 2012

Nigeria: NERC to Review Electricity Tariff for SMEs

The Nigerian Electricity Regulatory Commission (NERC) has disclosed plans to review the status of all licences it has issued as well as review the electricity fixed charge for Small and Medium Enterprises (SMEs).

This according to the Chairman of the Commission, Dr. Sam Amadi, became necessary following concerns raised by the SMEs that the high fixed cost component might run them out of business if unreviewed as the charge outweighs the volume of their business.

Amadi however, pointed out that reviewing the complaints of high fixed cost charge by the SMEs may not necessarily affect the projected revenues for the electricity distribution companies.

Similarly, the Commission said it was set to review all issued licences and take a firm decision on the non-performing ones in line with the provisions of the law.

Amadi, who was speaking at a press briefing in Abuja yesterday, said the cost of electricity in the country would remain the same at least for the next six months following a negative need to adjust the tariff.

He explained that a minor review of the new Multi-Year Tariff Order (MYTO) which came into effect on June 1, 2012, showed all the factors remained largely the same with zero need for tariff increase.

He informed that the review which has been approved by the Commission was based on some assumptions mostly financial and commercial in the tariff order, including exchange and inflation rates as well as the cost of gas and the available capacity.

He said: "We conducted rigorous reviews; we got verification of data from the Central Bank on the exchange rate and inflation rate and the system operator's daily report as to capacity that is available in the market and the cost of gas. Our projections in June about how the year will end in terms of the financial assumptions were verified and confirmed by the figures from the CBN.

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