FG reduces electricity tariffs as presidential poll draws near

The  Federal Government has knocked down electricity tariff by more than 50%, just 11 days to the presidential poll which holds on Saturday, March 28 and is being contested by incumbent President Goodluck Jonathan and challenger, Muhammadu Buhari.

Announcing the over 50% tariff slash yesterday, Sam Amadi,CEO of the Nigerian Electricity Regulatory Commission (NERC) said the decision was taken in response to complaints over tariff increase by industrial and commercial consumers.

Amadi said that following the complaints, NERC had called for a meeting with the leadership of power distribution companies.

Meanwhile some industry watchers wonder at the prioritising of power allocation across the country and say that with national power generation  swinging between  3,412.1 mw and 4,115.1mw, Lagos, the nation’s industrial hub ought to be receiving more power than is the case now.

“When power is at that level and the people are not feeling it, it means that transmission has really failed us”, one expert said.

Regarding the reduction of tariff, Amadi observed that the reason for the triff increase was that electricity distribution companies were passing on collection losses to consumers.

“ Furthermore, the Commission reviewed the technical and financial assumption of MYTO 2.1. The review shows that the major underlying cause of the skyrocketing increase in the tariff is the huge Aggregate Technical, Commercial and Collection (ATC&C) losses, which are passed through to consumers. In some DISCOs ATC&C losses increased tariff by as much as 80-103%.

He said it was the responsibility of the DISCOs to collect their revenue from their customers, and that failure to do so should not be a penalty to customers who pay their bills.

He added,  “It is clear that removing the collection losses will lead to lower tariffs for consumers. The removal of collection losses from customer tariff has reduced tariff by more than 50 percent in some places. Please note that the reduction does not affect the CBN facility and its repayment.

“Therefore, On Monday, March 9, 2015 the Nigerian Electricity Regulatory Commission (NERC) issued a new order to the effect that henceforth collection loss, which is defined as the ‘amount billed but not collected’, will not be automatically passed on to consumers of electricity.

“ Consequently, the collection loss for all DISCOs is set at zero. It is now the responsibility of DISCOs to convince the regulator of any exceptional circumstances for such loss to be passed to the consumers,” Amadi said in a statement.

He added, “This new order now amends the MYTO 2.1 and has reduced the tariff to be paid by all class of consumers. In the review MYTO 2.1 the Commission followed due process and the regulatory principles.

“The EPSR commits the Commission to ensuring full recovery of prudent costs for efficient operators. The Commission is obligated to make sure that only prudent and efficient costs are passed to consumers. The principle is to ensure that the distribution company operates efficiently and provides quality and affordable services to consumers.

“NERC remains committed to the principle of cost- reflective pricing and to the development of an efficient and financially viable electricity market. These are important to support the investment that is needed to ensure the electricity supply industry meets the needs of the Nigerian economy.

“ The decision to review tariff is completely compatible with the terms of the privatisation and has been reviewed with the Bureau for Public Enterprises (BPE). NERC and BPE are working together to advocate for series of fiscal policies that will foster easier access to investible capital to further increase capacity and enhance reliability in the sector,” he concluded.

YANGE IKYAA, with agency report