After Approving Hike in Prepaid Metre Prices, FG to Increase Electricity Tariffs
- Electricity tariffs are set to rise again in the next two months as NERC seeks to end government subsidy
- The new move will see electricity distribution companies setting tariffs for their consumers
- The development comes as the Nigerian government has reportedly incurred N2.1 trillion in subsidy this year
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
In the next two months, Nigerians will start paying the total cost of electricity as the Nigerian Electricity Regulatory Commission (NERC) seeks to end the Nigerian government's stabilisation role and transition the industry to a bilateral model.
Nigeria’s vulnerable fiscal position is worsened by the N2.1 trillion electricity subsidy, which the sector will pass on to the Nigerian government this year.
Source: UGC
FG incurs N633.30 billion in subsidies
In the first quarter of this year, Nigeria incurred about N633.30 billion in outstanding subsidies, with the monthly debt declining from N211.56 billion amid the naira devaluation and increased gas prices.
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NERC approved the tariff adjustment this year with Band A customers paying N209/Kwh.
The Guardian reports that the frozen Band B to E is adding between N170 and N180 billion monthly shortfall, bringing the total subsidy for this year to N2.1 trillion.
Experts believe this could change if the President approves the move or economic conditions change.
NERC permits DisCos to set tariffs
According to reposrts, NERC has ordered the dislodgement of the Nigerian Bulk Electricity Trading (NBET) company from the electricity market and is pivoting it towards a bilateral construct between generation/trading licensees and distribution licensees, ostensibly removing the government from bearing the brunt.
The new order specifies a 60-day timeline from August for DisCos to assume responsibility for implementing cost-reflective tariffs, removing the Nigerian government from the business model, and the DisCos expected to negotiate contracts with GenCos.
Experts say the move may lead to an increase in electricity tariffs across the frozen tariffs.
A recent report by Legit.ng showed that the NERC approved a hike in prepaid meter prices.
FG approves hike in prepaid meter prices
Ikeja Electric has announced an approved price increase for single-phase and three-phase prepaid meters.
All electricity distribution companies (DisCos) are expected to implement the increase.
In a notice shared with its customers on Wednesday, August 8, 2024, Ikeja Electric stated that all prices are valid subject to meter availability.
According to the company, a single-phase prepaid meter will now cost an average of N124,700, up from the previous price of N118,357 announced in July.
Nigerians needing three-phase prepaid meters will pay an average of N213,387, up from the previous rate of N206,722.
Nigeria gets US investor for electricity project
Legit.ng earlier reported that the Federal Ministry of Power and the US Agency for International Development signed a memorandum of agreement on Wednesday, July 10, to guarantee Nigeria's commitment to electrical sector reforms, market openness, liquidity, and expanding access to cheap power.
Both parties declared this in a statement released by the Ministry of Power in Abuja, as reported by The Punch.
The MOU aims to support the implementation of a N115.2 billion US government grant-funded technical assistance program intended to support power sector development and reforms in Nigeria.
Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng
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