Nigerians Face 35% Electricity Tariff Increase - Official

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25 February 2020

Nigerians would soon be faced with a 35 per cent hike in electricity tariffs, officials said on Tuesday, as regulators seek to reposition a sector that has been moribund for decades.

At an interactive parley with journalists on Tuesday in Abuja, the management of Abuja Electricity Distribution Company (AEDC) said an upward review of prices by federal electricity regulators has commenced.

"We are looking at an average increase of about 35 percent," Ije Okeke, a finance executive at AEDC, told reporters. The session was held as part of AEDC's effort to educate the public on its role in the highly controversial power sector, with officials lamenting that most of the blame was being heaped on them by politicians even when they have a restricted latitude to take key industry decisions.

Officials complained that about 60 per cent of the energy distributed to consumers failed to match revenue projections, adding additional burden to distributors' portfolio.

Nigerians currently pay about N24 per kilowatt hour of electricity. A 35 per cent increase would jerk this to N32 per kilowatt hour. This could further enrage a populace already complaining about overbilling and under-delivery of service by distributors.

Ms Okeke's comments come as the Nigerian government announced plans to phase out estimated billing scheme, which allowed distributors to impose arbitrary charges on households without metering systems.

High tariffs have already been announced across the country as the government ordered 78 per cent upward review in January, although this was in turn heavily subsidised by the government.

Although it remained unclear to officials when the fresh tariff hike in Abuja and elsewhere would kick off, the government had tentatively fixed April 1 for the expiration of its subsidy on electricity tariff, prompting distributing companies to commence awareness crusade to brace consumers.

Despite decades of public investment, Nigeria's electricity output remains some of the lowest in Africa, generating about 5,000 megawatts for a population close to 200 million. Of the generation capacity, only an average of 1,750 megawatts is distributed per day across the country.

Ernest Mupwayo, managing director of AEDC, welcomed the government's move to abolish estimated billing, but said the challenges confronting power companies transcend billing inconveniences.

Mr Mupwayo said distributors have been unable to raise funds from commercial banks to import enough meters into the country, saying about $150 million available for procurement was grossly inadequate.

More than five years after power distribution was privatised, millions of households have yet to be metered, despite repeated assurances by regulators and industry players that the matter was being addressed.

The power distribution sector was privatised into 12 regional operators, with government owning about 40 percent stake in each.

In Abuja distribution area, which includes Kogi, Niger, Nasarawa and the greater Federal Capital Territory, about 170,000 homes have metering systems as of December 2019.

Yet, Mr Mupwayo promised a rapid installation exercise that would see AEDC connect over 330,000 homes by the end of 2020 and nearly 870, 000 homes over the next three years.

"If impediments are waived" by government, Mr Mupwayo said, then a regular power supply, installation of meters and reasonable billing would "be possible."

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