The Nigerian Electricity Regulatory Commission (NERC) has announced that it would review the country’s electricity tariff as adopted in the Multi-Year Tariff Order (MYTO) methodology. This system permits minor reviews every six months, major reviews every five years, and where the industry’s parameters experience significant changes from the existing tariff.
What they are saying
Chairman of NERC, Mr. Sanusi Garba, clarified that the bi-annual review did not mean an increase in tariffs as the meeting was to address issues including inflation, forex, generation volume and other matters affecting the sector.
- In a memo, NERC stated that “the review will cover, among others, changes in relevant macroeconomic indices. However, it would not necessarily lead to tariff increase for consumers, noting that some end users may actually have their rates reviewed down if the data available indicated otherwise.”
What you should know
- The last official review by the electricity commission was on the 31st December 2021, in which the regulators increased the tariffs to compensate for inflation and the forex crisis in the country. The hike took effect in February 2022.
- In March, the Minister of Finance, Zainab Ahmed, confirmed that the federal government has been cutting down the N600 billion a year subsidy on electricity. She said FG would pay about N30 billion in 2022.
- The removal of subsidies on electricity was due to the difficulties the country’s economy was facing and to avoid shortening the profit margin expected by investors in the power sector.
- Although the principal shut down the idea of a hike at the next review in July, a hike in tariffs is not entirely out of the picture, seeing the latest inflation rates published by the National Bureau of statistics.