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Energy

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

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

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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.

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

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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.

  • 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.

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]

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    Energy

    Nigeria needs about 100,000MW of power – Elumelu

    Tony Elumelu has disclosed that Nigeria needs about 100,000MW to power the economy.

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    Tony Elumelu UBA H1 Year 2019 Tony Elumelu, United Bank for Africa

    Nigeria needs to increase its electricity generation from about 5,000 to 100,000 Megawatts to power the nation’s economy.

    This was disclosed by the Chairman of Transcorp Group, Tony Elumelu in an interview on Arise TV on Wednesday. According to him, the nation needs to stabilize its transmission lines, provide adequate gas supply and strengthen her payment plans.

    He said, “Nigeria needs about 100,000 MW to power the economy. It also needs to stabilize the transmission lines and ensure access to gas supply.

    READ: Electricity: FG to inject 700MW to grid through Zungeru Hydroelectric – Minister

    For Nigerians to heave a sigh of relief in the sector, it needs to boost generation, fix gas supply to GenCos, boost payment of distribution and ensure power generated are taken by DisCos. Here I must commend the CBN Governor because he has helped to maintain peace in the space.

    Before the end of 2020, NBET used to pay about 20% but it now pays about 50%. It is still a critical sector that still needs investment and stakeholders must ensure it works.”

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    Business

    NERC approves N215 billion for Ikeja and Eko DisCo upgrade

    The NERC said the approved upgrades would improve the distribution of power supply by the DisCos.

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    Discos, TCN suspends KEDCO, TCN suspend Kano Electricity Distribution Company, Kano Electricity Distribution Company, Transmission Company of Nigeria, Market Operator in Nigeria's power sector

    The Nigerian Electricity Regulatory Commission (NERC) announced it has approved the sum of N121.92 billion for Ikeja Electric Plc infrastructure upgrade for the next 5 years and also N93.76 billion for Eko Electricity Distribution Company (EKEDC) infrastructure upgrades within the same period.

    The NERC disclosed this in its Performance Improvement Plan (PIP) and Extraordinary Tariff Review Application which was released on Monday and signed by  NERC’s Chairman, Mr. Sanusi Garba, and Mr. Dafe Akpeneye, Commissioner, Legal, Licensing and Compliance.

    PIP and Capital Expenditure (CAPEX) program is expected to take effect from July 1, 2021 to June 30, 2026.

    READ: What to do if your DisCo has not complied with reversed electricity tariff this week

    The NERC said the approved upgrades would improve the distribution of power supply by the DisCos citing public hearing scrutiny in its PIP and Extraordinary tariff review applications in a bid to ensure accountability.

    The approved CAPEX for Ikeja Electric Plc would be N24.38 billion annually from 2021 to 2026, while for Eko Electricity, it would be  N18.75 billion for the same period, totaling N93.76 billion.

    The upgrades would be in the areas of existing network capacity, technological enhancements to reduce outages, and the acquisition of tools to improve network performance.

    READ: DisCos record N273.42 billion shortfall in 2020, receive N542.73 billion from customers

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    What you should know

    Recall Nairametrics reported that a new Extraordinary Tariff Review Applications, 5-year Performance Improvement Plan (PIP) and Capital Expenditure, CAPEX, for the Electricity Distribution Companies (DisCos) was approved by the NERC.

    For the Abuja Electricity Distribution Company, AEDC, the company proposed to undertake numerous interventions to improve service delivery to customers. Over the next five years, the proposed interventions will allow AEDC to achieve substantial improvement in service delivery and increase the number of new customers from the current level of 1,214,259 to 3,450,695.

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