Minister of Power, Chief Adebayo Adelabu, has succedded in the implementation of his crusade for migration to “full cost-reflective tariff regime” of zero subsidy for electricity, with the Nigerian Electricity Regulatory Commission (NERC), a subsidiary of the Ministry approving the increase of electricity tariff for customers under the Band A classification.
NERC’s Vice Chairman, Musliu Oseni, who spoke at a press briefing in Abuja on Wednesday, said the increase will see customers pay N225 kilowatt per hour, from the current N66.
Customers under Band A are those who enjoy 20 hours of electricity supply daily.
Oseni said these customers represents 15 percent of the 12 million electricity customers in the country.
On Wednesday January 31, 2024, Minister of Power said that the only sure way to escape from the energy crisis bedeviling Nigeria and Nigerians is to stop electricity tariffs’ subsidy, just like the fuel subsidy.
Adelabu noted that Nigerians need to have a conversation on whether to pay for the real price of electricity, stating that even within the West African sub-region, Nigerians pay the lowest electricity tariff. He added that Ghana, Ivory Coast, Niger Republic pay more than double of the tariffs Nigerians pay.
The Minister, who spoke after visiting the 750 megawatts (mw) Olorunsogo Power Generating Plant in Ogun State and the 500mw Omotosho Generating Plant in Ondo State, said: “If our government is not ready to fund subsidies, it is actually better for us to migrate to a fully-cost-reflective tariff, because liquidity is a major issue in the sector, which has led to a huge debt being owed power generating companies. And once they are owed, they are also unable to pay the gas suppliers. When the gas suppliers are not paid, they will be unwilling to supply regular gas to them.”
The NERC Vice chairman told journalists on Wednesday that the Commission had also downgraded some customers on the Band A to Band B due to non-fulfilment of the required hours of electricity provided by the electricity distribution company.
“We currently have 800 feeders that are categorised 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.”
He added that the review will not affect customers on the other Bands.
Citing sources, Bloomberg had on Tuesday reported that power companies will be allowed to raise electricity prices to N200 ($0.15) per kilowatt-hour from N68 for urban consumers.
It quoted people in the presidency with knowledge of the matter saying this was in a bid to attract new investment and slash about $2.3 billion spent to cap tariffs (subsidies).
According to the news agency, “Nigerians will now have to pay $2.42 per one million British thermal units from the previous rate of $2.18 MMBtu.”
The development comes amid Monday’s announcement by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) of an increase in the price of natural gas, which is used to generate more than 70% of electricity in Nigeria.