Electricity tariffs in major estates in the Lekki area of Lagos that enjoy 24/hours power have increased prices to as high as N105/kWh Nairametics investigations reveal.
Most estates in the Lekki area of Lagos rely on a combination of grid power from Eko Distribution Company (Eko Disco) and privately generated power to deliver 24/7 power to their residents. The power is contracted via a power purchase contract with independent power suppliers.
Triggered by the new tariff order
According to our investigations, most of the major estates have either increased their tariffs or are engaging in negotiations with resident associations to increase power costs.
In Nothern Foreshore, an Estate located off the Lekki Expressway, the tariff rose from about N58/kWh to has N80.80/kWh. In a letter to residents of the association seen by Nairametrics, the Estate Management informed residents that the decision to increase their tariff was due to the increase in power supply from the grid (Eko Disco).
“Similarly, and pursuant to Section 76 of the EPSR Act 2005 the Nigerian Electricity Regulatory Commission has recently received presidential approval for the implementation of the new Service-Based Tariff (SBT) effective 1ST September 2020.
In view of this, the DISCO Eko Electricity Distribution PLC (EKDP) has directed via a letter dated 4TH September 2020 an immediate implementation of the new approved tariff for the Estate from N29/Kwh to N56.94/Kwh. An almost 100% (Approximately 28 naira) increase. This development will also have an impact on the hybrid tariff for our central power solution. Consequently, we have applied the new approved tariff to the existing hybrid tariff model and reached a new levelized energy tariff for our central power solution of =N=80.80 /KWH.”
A hybrid or blended tariff is derived from the weighted average cost of consumption from the grid and other sources of private power delivered to an estate.
Other estates surveyed by Nairametrics also reveal similar trends. In Friends Colony located around Augungi area of Lekki, tariff increased to N80/kWh while Millenium Estate in Oniru increased theirs to N105.4/kWh. Other estates on both sides of the Lekki Epe Expressway are also said to be deliberating internally as they consider a possible increase in line with the change in grid electricity cost.
A Private Power producer who preferred to remain anonymous informed Nairametrics that there was a need to review their tariffs following the recent pronouncements by the government. “We use blended power to help reduce the cost of power generation thus, a change in a key component of that power will result in a change in the amount we charge the estates. This is why we have informed them of plans to increase the tariffs,” he explained.
For Eko Disco, their tariff increased to N54.08 for non-maximum demand customers and as high as N56.94 for Maximum Demand Customers. These are for Band A customers which according to the service reflective tariff will enjoy up to 20 hours of power supply daily.
Our investigation also reveals estates that are completely off-grid have left their tariffs the same as they observe the effect of the exchange rate on their power cost.
Why this matters: The recent increase in electricity tariffs means the government is no longer subsidizing power supply for locations that enjoy 12 hours and above in power supply.
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- Thus estates with a hybrid of grid and private generation might see a change in their tariffs if they fall within the tariff bands A to C (above 12 hours of power supply).
- However, since tariff increase for those who are in locations classified as Band D & E is not increasing, the estates may not see their hybrid tariffs go up.