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New hike in electricity tariff to reduce subsidy for 2024 by N1.14 trillion – NERC

The Nigerian Electricity Regulatory Commission (NERC) has stated that the newly approved electricity tariff is anticipated to cut down the subsidy for the fiscal year 2024 by approximately N1.14 trillion. 

Mr. Musliu Oseni, the Vice Chairman of NERC, made this announcement in a statement in Abuja on Wednesday. 

However, according to Oseni, the Federal Government has shown intentions of transitioning to a targeted subsidy regime to alleviate the effects of macroeconomic changes. 

  • ” With the newly approved tariffs, subsidies for the 2024 fiscal year are expected to reduce by about NGN1.14 trillion in furtherance of the Federal Government’s realignment of the subsidy regime.  
  • ” While largely protecting vulnerable customers and fostering investments targeted at providing efficient service delivery in the Nigerian Electricity Supply Industry (NESI).  
  • ” The overarching objective of the commission in the consideration of the tariff application is the creation of a financially sustainable electricity market providing adequate and reliable power supply to drive the Nigerian economy. 
  • ” The commission, upon due consideration of the tariff applications, has approved revised rates affecting only customers classified under Band Serv category which is about 15 per cent of the customer population,” he said. 

Process of Tariff Review  

Furthermore, Oseni explained that the commission undertook a detailed assessment of the tariff proposals submitted by the 11 Electricity Distribution Companies (DisCos), adhering to its established regulations and business rules. 

He mentioned that before the review process, there was an examination of the performance improvement plans of the licensees, which also encompassed a public hearing.  

During this hearing, stakeholders and interveners scrutinized the rate filing presented by the public utilities. 

Oseni said that empirical service data had confirmed that this class of customers had truly received the committed level of service. 

He added that a mechanism for enforcement and compensation has been set up to address service failures. 

  • ” All DisCos have been provided with mandatory targets for investments and migration of more customers to Band. 
  • ” The commission has established a robust monitoring framework leveraging on technology to ensure that the public has visibility of the service covenant with their service providers.  
  • ” We wish to assure all Nigerians that the commission working in collaboration with the policymakers remains committed towards providing adequate and reliable electricity to all citizens. 
  • ” This is as we work diligently with state governments to deliver on the gains of the Electricity Act 2023,” Oseni added.  

Backstory 

Earlier, NewsTimes reported that the federal government through the Nigerian Electricity Regulatory Commission (NERC) raised the electricity prices to N225/KWh for consumers classified as Band A. 

This is contained in a press statement by the Vice Chairman of NERC Musliu Oseni on Wednesday. 

Oseni stated that these customers represent 15% of the nation’s 12 million electricity consumers. 

He added that because the required electricity supply hours were not met, the commission shifted some customers from Band A to Band B. 

  • “The order takes effect from today and in that order the commission has approved a rate review of N225 per killowatt hour for just under 15% of the customer population in NESI. 
  • “That means that less than 15% of the customers will be affected,” Oseni announced.  

He, however, said that the review would not impact customers in the other Bands. 


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