Nigeria: Power Firms Lose N366 Billion to Tariff Hike Postponement

The postponement of the electricity tariff hike shift from April to June is estimated to have cost the 11 Distribution Companies (DisCos) about N366 billion in expected revenue.

The Nigerian Electricity Regulatory Commission (NERC) which had planned to approve the tariff hike, however, froze it on March 31, 2020, following the outbreak of the COVID-19 pandemic. It is expected to announce the approval by July 1, 2020, barring other disruptions.

Investigations by Daily Trust on the extraordinary tariff review template by NERC containing the planned tariff increase indicates that from April to June 30 that the freeze covers, the DisCos and the entire power sector is losing N122bn every month.

The top three DisCos affected the most by the tariff hike freeze are Ikeja DisCo, with potential loss of N58bn; Ibadan DisCo, N52.1bn; and Eko DisCo, N40.8bn.

Yola DisCo will be the least loser as it is losing N3.5bn every month, and will lose N10.6bn expected revenue by the end of June, 2020.

Giving a 23,803 billion kilowatts hour (kwh) energy allocation to the 11 DisCos within the planned nine months (April to December, 2020) of the initial tariff hike, the firms would have raked in a revenue of N1,094tn by selling the energy at an average rate of N46 per kwh.

NERC had also planned to approve another tariff hike from January to December, 2021, by raising the average electricity cost per hour from N46 to N50.3. That was if this initial hike was successful, barring the disruption by the COVID-19 pandemic.

The N1tn expected revenue is about N336bn higher than what they could generate for the nine months this year if the electricity tariff rate remains at its current level. The prevailing average Allowed Tariff (AT) for the DisCos is N30.7/kwh with 23,572 billion kwh of energy allocation.

A breakdown of the expected N1.094trn revenue collection by DisCos shows that for the nine period, Ikeja DisCo will be the highest revenue generator with N173.9bn. Ibadan DisCo is next with N156.4bn, followed by Eko DisCo with N122.4bn, and Enugu DisCo expecting N11.9bn in revenue.

Benin DisCo was expecting N98.7bn, Abuja had expected N92.4bn, while Kaduna was to get N85.8bn. At the lower rung, Yola DisCo (run by the Federal Government) ought to get N31.8bn. Jos DisCo expected N50.2bn, and Kano DisCo expected N65.8bn.

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