Nigeria: NERC Suspends New Electricity Tariffs Over Poor Power Supply

(file photo).
1 April 2020

Nigerian Electricity Regulatory Commission (NERC) has suspended the payment of the new electricity tariffs scheduled to take off from today, citing poor electricity supply, wide metering gap and the impact of the COVID-19 pandemic.

In an Order No: NERC/198/2020, the commission stated that from the public hearings conducted prior to the tariffs review, it was obvious that the electricity end-users of the 11 distribution companies (Discos) were willing to pay appropriate rates for services rendered by the Discos.

The order, which was signed by NERC Chairman, Prof. James Momoh, and the Commissioner in charge of Legal, Licensing, and Compliance, Mr. Dafe Akpeneye, however, noted that the willingness of customers to pay the new tariffs depends on the guaranteed hours of service, quality of electricity and adequate metering.

The commission said the willingness of customers to pay did not depend on improvement promises by the Discos that were never implemented in previous tariffs reviews.

"The wide metering gap in NESI (Nigerian Electricity Supply Industry), currently at 60 per cent, is about a major impediment to both an immediate review and the revenue projection for the Discos. The consideration of customer's complaints was not placed on the agenda as the public hearings were for a defined purpose.

"The commission, however, observed that end-use customers used the opportunity to provide feedback on their dissatisfaction with the quality of service provided by the Discos and bitter feedback was also provided on the practice of estimated and sometimes, arbitrary billing," the order explained.

NERC also noted that the global COVID-19 has significantly impacted on the availability of imported components for local assembly of meters for supply to end-user customers under the commission's Meter Asset Provider (MAP) regulations and rollout plan for the existing stock.

The commission also acknowledged what it described as the adverse effects of COVID-19 pandemic on the global economy and the average Nigerian.

"The orders of the commission - Order No: NERC/GL/184/2019 to NERC/GL/184/2019 entitled: 'The December 2019 Minor Review of Multi-Year Tariff Order (MYTO) 2015 and Minimum Remittance Order for the Year 2020' shall remain in force until June 30, 2020, when a new minor review order shall be issued by the commission.

"There shall be no increase in tariffs of end-use customers on April 1, 2020," NERC said.

The commission directed all the Discos to submit a detailed plan for the attainment of full recovery of prudent costs and allowed return on capital (revenue requirement) by June 30, 2021.

"The revenue recovery and financial sustainability plans shall be submitted to the commission no later than April 21, 2010. The plans shall include a path, with timelines for transiting customers to a higher quality of service," NERC added.

NERC, in its 'December 2019 Minor Review of Multi-Year Tariff Order 2015 and Minimum Remittance Order for the Year 2020,' dated December 31, 2019, had said the new tariffs would take off today.

It said the order was issued to reflect the impact of changes in the minor review variables in the determination of cost-reflective tariffs and relevant tariff and market shortfalls for 2019 and 2020.

The commission said the order also determined the minimum remittances payable by the Discos in meeting their market obligations based on the allowed tariffs.

It said: "The federal government's updated Power Sector Recovery Programme does not envisage an immediate increase in end-user tariffs until 1st April 2020 and a transition to full cost reflectivity by the end of 2021.

"In the interim, the federal government has committed to funding the revenue gap arising from the difference between cost-reflective tariffs determined by the commission and the actual end-user tariffs payable by customers."

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