NERC vice president says tariff increase was to generate revenue 

The Vice President of the Nigeria Electricity Regulatory Commission (NERC), Musiliu Oseni, has explained the rationale behind the recent hike in electricity tariffs for Band A customers.

The increase, announced by NERC earlier on Wednesday, entails customers paying ₦225 per kilowatt-hour, a significant rise from the previous rate of ₦66.

Speaking on Channels Television’s Politics Today program, Mr. Oseni explained that the Commission is mandated by its Act to ensure that licensed entities operate efficiently, enabling them to recover adequate revenue to cover capital investments, and operational costs, and provide returns on their investments. 

Oseni said: “What informed the decision apart from the position of the Act is in the sense that if you look at December 2023 there was an improvement to the quality of service to January but from January up to date, there was a dip in generation availability.

“What caused that was because there was no review of the tariff. The DisCos cannot be mandated to pay for what they have not been allowed to charge and in that case, the payment to generation companies has significantly dipped which affects their ability to maintain their machine and also to pay for gas.

“And if they are not able to pay for gas definitely, they won’t be able to generate not minding the fact that they also need money to maintain their machines.

“So, we are at a point where it is clearly that if nothing is done to ensure that tariff is reviewed so that the market can be relatively liquid the quality of supply won’t improve.”

Oseni further clarified that the tariff adjustment exclusively impacts Band A customers due to their access to approximately 20 hours of electricity per day. 

He noted that before the tariff revision, the Band A category had been reduced from over 1000 feeders to 481 feeders out of a total of 3000. 

“We currently have 800 feeders that are categorized as Band A, but it will now be reduced to under 500. This means that 17 percent now qualify as Band-A feeders. These feeders only service 15 percent of total electricity customers connected to the feeders.

“The commission has issued an order which is titled April supplementary order and the commission allows a 235 kilowatt per hour,” Oseni said in a press briefing announcing the new tariff earlier in the day.”