NERC, DisCos reportedly set to increase electricity tariff from January 1 2024

Nigerian electricity Distribution Companies (DisCOs) are reportedly set to increase electricity tariff from January 1 2024. An official familiar with the matter revealed the development to Daily Trust.

According to the official who pleaded anonymity, the Nigerian Regulatory Commission (NERC) has already approved the hike. The commission also held a virtual emergency meeting with the DisCos to that effect while directing them to inform their customers of the development.

“All has been perfected for the new tariff to take effect from the first of January, 2024. It is now left for various electricity distribution companies to enlighten their customers on new developments,” the official said.

While it is yet unclear how much increase would be put in place from January 1 as that information wasn’t readily available, the official, however, noted that the uncertainty and the harsh economic climate have put the DisCos in a difficult situation. He noted that while it is mandatory for electricity distribution companies to regularly evaluate tariffs every six months, the recent increase would meet customers’ dissatisfaction.

“In fact, we were perturbed by the short notice and how we would reach out to our customers about the increase,” he said.

While not denying the development, another source from the Transmission Company of Nigeria (TCN) said that only the NERC would have an idea of how much the increase would be.

DisCos tariff hike might contravene President Tinubu’s last order

The latest development is coming just over a month after Nigeria’s president, Bola Ahmed Tinubu halted a planned electricity tariff hike by the DisCos. According to Nigeria’s Minister of Power, Adebayo Adelabu, the government still pays a subsidy on electricity and as such, the power generation companies as well as the DisCos shouldn’t be in a hurry to implement what he described as a “cost-reflective tariff”.

“You cannot jump overnight and implement the cost-reflective tariff. I can tell you that till today the government still subsidises power. The tariff should have been raised months back, but Mr President said until we are able to achieve regular and incremental power supply we can’t touch the tariff,” Adelabu said at the time.

He also said there is a gap between the cost-reflective tariff that DisCos are supposed to charge and the allowed tariff. The huge gap is what the government is still handling as a subsidy. This, he said, affects liquidity in the system, and investments, and causes so many constraints.

This development is also coming six months after the last electricity tariff hike. At the time, the DisCos, operating under the Nigerian Electricity Supply Industry (NESI), alerted their customers to a 40 per cent hike in tariff starting from July 1.

In the statements sent to respective consumers, the DisCos, drawing the basis of the increase in Multi-Year Tariff Order (MYTO), stated that the review was due to the fluctuation of the local currency, the naira in comparison to the dollar in the exchange rate market.

In essence, the increase was to ensure that the prices charged by the DisCos are fair to customers and sufficient to allow the distribution companies to finance their operations and to allow for reasonable earnings for efficient operation.

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