Connect with us
nairametrics

Energy

President Buhari reportedly approves electricity tariff increase from September 1st 2020

Electricity Tariff hike is set to go live on September 1, 2020.

Published

on

The Nigerian Electricity Regulatory Commission (NERC), National electricity grid collapses again, as NUEE suspends strike action , FG to increase electricity tariffs in order to improve power supply, Power: Liquidity crisis-same old story in 2020?, GenCos urges NBET to pay up N1 trillion debt, Electricity Tariff: FG, electricity stakeholders to work on equitable rate , Power: NERC applies "brakes" on hike in tariffs, NERC to sanction 7 DisCos over uncapped estimated billing

Nigeria’s President Muhammadu Buhari has approved the much-anticipated electricity tariff increase effective from September 1st, 2020. This is according to a report in Thisday Newspaper.

The Nigerian Electricity Regulatory Commission (NERC) had approved service reflected tariffs for the electricity sector and was due to commence July 1, 2020 after it was initially postponed from April 1, 2020. However, this was suspended after reports indicated Electricity Distribution Companies, DisCos,  had pushed for a postponement until key areas of disagreement are sorted.

According to Thisday, the president ” may have finally approved the official implementation of cost-reflective tariffs for the Nigerian Electricity Supply Industry (NESI),” with the tariff now set to go live on September 1, 2020. The report also indicates the president signed off the tariff increase on Tuesday following pressures by the World Bank.

READ: FG names railway stations after Tinubu, Saraki, Awolowo, others

U-Turn

Just a few months ago, the National Assembly promised tariffs will not increase until the first quarter of 2021 following several deliberations it held with stakeholders.

GTBank 728 x 90

In the course of the meeting, the DISCOs too admitted that they were not well prepared for the planned hike in tariffs even though they so much desired the increase. The meeting agreed to defer the planned hike till first quarter of next year while the leadership of the National Assembly promised to meet with President Muhammadu Buhari on the issue.

“The agreement here is that there is not going to be any increase in the tariffs on July 1st,” Lawan said at the end of the meeting.

“The Speaker and I, we are going to take appropriate action and meet with the President. We are in agreement here that there is no question on the justification of the increase but the time is simply not right and appropriate measures need to be put in place. So between now and the first quarter of next year, our task will be to work together with you to ensure that we put those blocks in place to support the eventual increase in tariffs,”  the President of the Senate, Ahmad Lawan

GTBank 728 x 90

READ: Implications of CBN’s latest devaluation and FX unification

It is unclear whether the National Assembly will once again wade into this matter.

World Bank Pressure

Nigeria applied for a $3 billion world bank loan from which $1.5 billion and another $1-$1.5 billion loan is for State Governments. However, as reported earlier, the world bank expects Nigeria to meet certain preconditions before the loan is disbursed. Some of the conditions we gather include;

  • Unification of the exchange rate
  • Introduction of new electricity tariffs
  • Removal of fuel subsidy.

The World Bank is also reported to have earmarked $750 million for the Power Sector and reportedly will not disburse the loans if the power sector is not operating a cost-reflective tariff regime. However, it appears DisCos had some issues to clarify with stakeholders such as the Regulators before a new tariff can be approved.

What this means: By giving presidential approval it seems inevitable that new electricity tariffs could kick in starting September 1st, 2020.

Jaiz bank ads
  • This means most Nigerians will now have to pay more for electricity.
  • Electricity is a major component of Nigeria’s inflation rate which has galloped to 12.82% as of July 2020.
  • It is thus, inevitable that Nigeria’s inflation rate will remain high in the months to come.
  • It is also expected that the tariff increase should be commensurate with an increase in power supply.

Fidelity ads

Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper. The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference. The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - [email protected]

1 Comment

1 Comment

  1. Olu

    August 28, 2020 at 6:51 am

    Nigeria is run so that the poor gets poorer. There will be resistance from the youth one day

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Energy

Nigerian firm set to raise $1.2 billion to purchase electricity meters

MAPCo plans to raise N480 billion to purchase electricity meters and to help the DISCOs plug revenue gaps in their operations.

Published

on

The Nigerian Electricity Regulatory Commission (NERC), National electricity grid collapses again, as NUEE suspends strike action , FG to increase electricity tariffs in order to improve power supply, Power: Liquidity crisis-same old story in 2020?, GenCos urges NBET to pay up N1 trillion debt, Electricity Tariff: FG, electricity stakeholders to work on equitable rate , Power: NERC applies "brakes" on hike in tariffs, NERC to sanction 7 DisCos over uncapped estimated billing

A Nigerian firm, Meter Assets Finance and Management Company (MAPCo), has concluded plans to raise N480 billion ($1.2 billion) over the next 3 years, to purchase electricity meters and help the electricity distribution companies (DISCOs) plug revenue gaps in their operations.

This is also in line with the Federal Government’s initiative to ensure that all electricity consumers are metered, which will put an end to estimated billing by the DISCOs.

According to a report from PricewaterhouseCoopers, less than one-tenth of Nigeria’s 41 million households have their electricity consumption metered, and half of those are faulty. As a result, distribution companies have to estimate bills, resulting in constant conflict with the consumers that delay payments.

The Chief Executive Officer of New Hampshire Capital, Onion Omonforma, said the Meter Assets Finance and Management Co. hopes to end the practice of estimated billings by raising funds to purchase and supply meters to consumers.

New Hampshire Capital, FBNQuest and Kairos Investments Africa are helping to package and structure the venture, known as MAPCo, for investors to either buy equity or inject debt into the company.

GTBank 728 x 90

What they are saying

Omonformaa said, “The electricity distribution firms will then have the money to go back and buy more meters and the cycle continues, paving the way to close the metering gap. MAPCo will collect the cost of the meters from consumers at a premium over the next 10 years. The meters will be handed over to the power-distribution companies once paid off.’’

While disclosing that MAPCo plans to issue a N100 billion bond in the next year, Omonforma also pointed out that roadshows have been planned for the U.S. and Europe, and will include local institutional investors.

He said, “We envisage that a lot of people who are looking for a long-term instrument will key into it,”

GTBank 728 x 90

It can be recalled that apart from repealing the estimated billing methodology in determining tariffs for electricity consumers; the Federal Government had insisted that all consumers must be metered, as part of the condition for a tariff increase.

Also, as part of the agreement reached with the organized labor in respect of the tariff increase; the Federal Government disclosed that the National Mass Metering Programme will be accelerated, with the distribution of 6 million meters to Nigerians for free.

What this means

A huge number of electricity consumers across the 36 states and the FCT are still unmetered by their respective DISCOs. This initiative by MAPCo will help bridge the existing gap, with more electricity consumers acquiring a prepaid meter and doing away with the controversial estimated billing.

Continue Reading

Energy

N1.5trillion accumulated losses of NNPC, a serious going-concern risk – PWC, SIAO Partners

The auditors of NNPC have raised doubts over the inability of the Corporation to continue as a going concern following rising and humongous losses.

Published

on

NNPC

According to the recently published 2019 Audited Financial Statements, the Nigerian National Petroleum Corporation (NNPC) Group and Corporation had an accumulated loss of N1.9 trillion and N474 billion respectively. The Auditors of NNPC, made up of Pricewaterhouse Coopers, SIAO Partners, and Muhtari Dangana & Co. have raised serious doubts over the inability of NNPC to continue as a going concern following rising and humongous losses, resulting in the negative capital base.

READ: U.S. budget suffers a deficit of $3.1 trillion in 2020, as pandemic slams the economy

In their report, the auditors disclosed that there is an existing material uncertainty that casts significant doubts on the ability of the NNPC to escape bankruptcy – as there are serious impairments on the company’s ability to generating sufficient revenues to meet its immediate obligations as at when due.

READ: NNPC reveals survival strategies to cope with oil sector downturn and new normal

What you should know

  • In its joint report to the stakeholders, the auditors gave an unmodified opinion and drew attention to the fact that the NNPC Group and Corporation recorded net losses of N1.8 billion and N107.8 billion respectively in 2019, compared to N803.1 billion and N254 billion in 2018 respectively. While its current liabilities exceed its current assets by N4.4 trillion and N1.1 trillion for the Group and Corporation respectively, compared to N3.3 trillion and N968.7 billion in 2018 respectively.
  • NNPC Group and Corporation’s current assets, according to the financial statements, stood at N5.3 trillion and N4.5 trillion in 2019, while total current liabilities stood at N9.7 trillion and N5.6 trillion respectively.
  • In 2018, NNPC Group and Corporation’s total current assets stood at N5.4 trillion and N4.8 trillion respectively, while total current liabilities stood at N8.7 trillion and N5.7 trillion respectively.
  • The accumulated losses according to the financial statement are approximately N1.5 trillion and N474 billion, compared to N1.6 trillion and N490.7 billion for the Group and Corporation in 2018 respectively.

READ: NNPC explodes, denies custody of $3.5 billion subsidy fund

GTBank 728 x 90

Explore Data on the Nairametrics Research Website

Download the Nairametrics News App

What to expect

  • The Management of the corporation is currently executing robust mitigation procedures, as it is receiving the requisite support from the Federal Government to ensure that the Group and Corporation have adequate resources to continue in operational existence for the foreseeable future.
  • To make the Group and Corporation commercially viable, the Federal Government had commenced the elimination of cost drivers responsible for the accumulation of the shortfalls in settling Domestic Crude Obligation; and the introduction of the Price Modulator mechanism in the Petroleum Products Pricing Regulatory Agency (PPPRA) template, designed to eliminate the major cause of the losses.
  • The Federal Government is also minimizing breaches to the country’s pipeline networks; pursuing the passage of the Petroleum Industry Bill, PIB, and its implementation, which would restructure the petroleum industry, improve transparency and governance, and also give the NNPC the autonomy to operate profitably.
  • The NNPC Management further revealed the plans to recapitalize the NNPC with steps to resolving all the outstanding related party payables and receivables and enable a clean slate start prior to recapitalization.

READ: Nigerian Stock market records sixth consecutive losses, investors lose N15.55 billion

GTBank 728 x 90

READ: NNPC to end oil-for-fuel swap system

Continue Reading

Energy

FG to inject over N198 billion on capital projects in power sector in 2021

The Federal Government plans to inject N198.27 billion on various capital projects in the power sector across Nigeria in 2021.

Published

on

FG Power storage and distribution

The Federal Government plans to inject N198.27billion on various capital projects in the power sector across Nigeria in 2021.

This was disclosed in the 2021 Appropriation Bill, which President Muhammadu Buhari presented to the National Assembly recently.

READ: Buhari presents N13 trillion 2021 Budget to National Assembly

Breakdown:

* National rural electrification, managed by the Rural Electrification Agency, will invest a total of N17.86billion on power infrastructure development in rural communities.

READ: CBN to sanction exporters who default on export proceed number

GTBank 728 x 90

* The Nigerian Electricity Regulatory Commission plans to invest N294.1million on capital projects, while capital projects to be handled by the Nigerian Electricity Management Services Agency will gulp N441.1million.

* The allocation for capital projects to be handled by the Transmission Company of Nigeria, as contained in the proposed budget, is N4.69billion.

READ: Buhari earmarks N420 billion for N-Power, GEEP and others under NSIP in 2021 budget

GTBank 728 x 90

* The capital outlay projected for 2021 by the Nigeria Electricity Liability Management Limited is N914.87million, while the National Power Training Institute targets to invest N294.1million.

* The total overhead for the entire ministry and its agencies was N1.16billion.

* The amount budgeted for personnel in the power ministry and its agencies is N4.9billion.

READ: Update: Buhari seeks power to freeze accounts, clamp down on money launderers

Jaiz bank ads
Continue Reading
Advertisement
Advertisement
Advertisement
ikeja electric
Advertisement
Advertisement
Patricia
Advertisement
FCMB ads
Advertisement
IZIKJON
Advertisement
Fidelity ads
Advertisement
first bank
Advertisement
bitad
Advertisement
Stallion ads
Advertisement
financial calculator
Advertisement
deals book
Advertisement
app
Advertisement