Tariff Hike: Despite Backtracking, Nigerians Fear DisCos May Secretly Implement Increase
- The last is yet to be heard about the speculated 40% hike in electricity tariff, which was supposed to begin on July 1
- Although tariffs remain the same for now, many Nigerians foresee electricity distribution companies (DisCos) carrying out a silent increase
- The last review was in January 2023, so July opens up a window for another review, according to the DisCos
The discussion surrounding the purported 40% increase in electricity tariff is far from over, as numerous Nigerians anticipate that electricity distribution companies (DisCos) might implement a subtle raise in rates.
In the last few weeks, there have been speculations of a 40% surge in electricity charges starting July 1, attributed to the escalating petrol prices.
Source: UGC
The rise is believed to be linked to the bi-annual review of the 2022 multi-year tariff order (MYTO) scheduled for this month.
Essentially, the existing tariff hike that was applicable from January to June this year is slated for reassessment, with a new tariff set to take effect this month.
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NERC yet to officially address speculated tariff hike
Criticism has been widespread since the announcement of the proposed new tariff, as stakeholders argue that the timing of the increase is inappropriate, especially considering the recent removal of fuel subsidy.
The situation, however, triggered concern among power consumers, leading many prepaid users to hurriedly purchase additional units for their meters in anticipation of a potential tariff hike.
While some electricity distribution companies backtracked on their earlier announcement of an upward tariff review, others have simply been diplomatic with their response and stated that the sector's regulatory agency has not yet approved such a review.
The Nigerian Electricity Regulatory Commission (NERC), the sector's regulatory agency, has remained mum and failed to comment on the issue, thereby sparking confusion amongst consumers.
So far, tariff remains the same
Investigations by Legit.ng revealed that the electricity tariff for users in Band A, fixed at N68/kilowatt-hour since January 2023, remained the same on Monday, July 3.
Also, the tariff for consumers in Band B remained at N54.13/kWh, while that of Bands C and D remained at N50.65/kWh and N33.20/kWh, respectively.
Tolu Adeleye, an electricity consumer in Lagos who, spoke to Legit.ng expressed his happiness about the DisCos not effecting the tariff hike.
He said:
I was elated to see that the new tariff has not been effected as earlier speculated. This is definitely not a time for tariff hike. We are already dealing with a lot of issues.
DisCos may be planning silent increase in tariff
According to its guidelines, NERC is empowered to carry out a bi-annual tariff review to account for the economic conditions, particularly the fluctuations between the naira and other major currencies, notably the dollar.
The last review was in January 2023; therefore, July opens up a window for another review, according to the position taken by the DisCos.
Even though the planned tariff hike seems to have been suspended, some consumers fear it may still be secretly carried out.
Commenting on the matter, Funso Olaniyan, a trader, suspects that emphasised that the anticipated tariff adjustment for this month might be carried out discreetly.
He said:
We have seen this happen before. In September 2022, an increase in tariff was effected without any public announcement by the DisCos, knowing we would always protest. We might just have a similar incident this July.
Another electricity consumer, Uche Nwabuisi, told Legit.ng that it would be too early to breathe a sigh of relief on the matter as the DisCos could still effect an increase, given the guideline which empowers a window for a bi-annual review of tariffs.
He said:
I'm just going to continue watching for a while. I would not be surprised if they suddenly go ahead with the increase, whether publicly or secretly. Secret increase has been done in the past, so I don't see why they would not do it again.
Also reacting to the possible tariff hike, Jude Ekpeyong, a power sector analyst and former staff of a Lagos DisCo, told Legit.ng that the current economic realities also affect the electricity distribution companies.
Understandably, they are empowered to review tariffs every six months. These reviews could be upward or downward, but we all know that prices of things in Nigeria hardly ever go down. The DisCos are also suffering the effects of inflation and exchange rate fluctuations, hence, the need to review tariffs.
Like earlier stated, it is not clear for now what NERC's position on the purported increase in tariff is, but electricity consumers and other stakeholders are closely watching for the new updates.
CBN releases N3.01bn to DisCos to improve electricity supply in Nigeria
In related news, Legit.ng reported that the Central Bank of Nigeria released N3.01 billion to electricity distribution companies (DisCos).
This amount is the latest release of the N213 billion Nigerian Electricity Market Stabilisation Facility.
The recent release also rounds up to a total of N18.26 billion so far disbursed to the first batch of beneficiaries of the programme.
According to the CBN governor, Godwin Emefiele, the intervention was made to improve the liquidity status of DisCos and aid their recovery of legacy debt which has been a major hindrance to their operations.
The grant will be issued under the Nigerian Electricity Market Stabilisation Facility (NEMSF-2) for capital and operational expenditure of DisCos.
Source: Legit.ng
