Several Distribution Companies (Discos) operating in the Nigerian Electricity Supply Industry (NESI) at the weekend alerted their customers to a planned electricity tariff increase from July 1, this year.
Essentially, the Nigerian Electricity Regulatory Commission (NERC) years ago, developed a mechanism, called the Multi-Year Tariff Order (MYTO), under which the expected increase falls.
The regulator insists that this to ensure that the prices charged by licensees are fair to customers and sufficient to allow the licensees to finance their activities and to allow for reasonable earnings for efficient operation.
MYTO, the methodology for regulating electricity prices provides a 15-year tariff path for the Nigerian electricity industry with limited ‘minor’ reviews each year in the light of changes in a number of parameters such as inflation and gas prices and ‘major’ reviews every five years, when all of the inputs are reviewed with stakeholders.
The Discos in statements sent to respective consumers on Sunday, drawing the basis of the increase in 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.
The Central Bank of Nigeria (CBN) in a bid to ensure parity in the Investors and Exporters (I&E) foreign exchange window, recently took the decision to collapse the official and parallel market prices which has seen the value of the naira drop to as much as N750 to the dollar.
Some of the distribution companies which alerted their customers to the new price range, included the Abuja Electricity Distribution Company (AEDC), Ikeja Electricity Distribution Company (IKEDC) and the Eko Electricity Distribution Company.
Abuja Disco for instance, told its customers that while some bands will have their tariffs increase to N100, others will have theirs raised higher with the new development.
“Effective July 1st 2023, please be informed that there will be an upward review to the electricity tariff influenced by the fluctuating exchange rate.
“Under the MYTO 2022 guidelines, the previously set exchange rate of N441/$1 may now be revised to approximately N750/$1 which will have an impact on the tariffs associated with your electricity consumption.
“For customers within band B and C, with supply hours ranging from 12 to 16 per day, the new base tariff is expected to be N100 per kWh while Bands A with (20 hours and above) and B (16 to 20 hours) will experience comparatively higher tariffs.
“For customers with a prepaid meter, we encourage you to consider purchasing bulk energy units before the end of this month as this will allow you to take advantage of the current rates and potentially make savings before the new tariffs come into effect.
“For those on post-paid (estimated) billing, a significant increment is imminent in your monthly billing, starting from August,” a message from the AEDC stated.
It further advised its customers to reach its customer support team if they needed further questions answered.
Also, the Ikeja Disco in a message sent to its customers, blamed the proposed increase in the rise in some key indices in the industry.
“Dear customers, electricity tariffs are set to go higher on July 1st due to the floating exchange rate. MYTO 2022 set the exchange rate at N441/$1, which may now be adjusted to about N750/$1. We may be looking at a base tariff of N100 per kWh for Band C (12 –16 supply hours per day).
“Bands A (20 hours and above) & B (16 – 20 hours) will be much higher. If you have a prepaid meter, buying bulk energy units for your home or office before the end of the month may help you make some savings before you have to buy at the new rate.
“For those on post-paid (estimated) billing, a significant increment is imminent in your monthly billing, starting from August. Please take note. Electricity units are set to jump by 30-40 per cent in just over a week. You are best advised to buy as many units as you can before July 1,” it stated in the message.
On its part, Eko Disco, which also couched its message in the same manner as the others, described the planned margin of increment as ‘significant’.
“Dear Customers, electricity tariffs are set to go higher on July 1st due to the floating exchange rate. MYTO 2022 set the exchange rate at N441/$1, which may now be adjusted to about N750/$1.
“We may be looking at a base tariff of N100 per kWh for Band C (12 – 16 supply hours per day). Bands A (20 hours and above) & B (16 – 20 hours) will be much higher.
“If you have a prepaid meter, buying bulk energy units for your home or office before the end of the month may help you make some savings before you have to buy at the new rate.
“For those on post-paid (estimated) billing, a significant increment is imminent in your monthly billing, starting from August,” it stated.
The Nigeria Labour Congress (NLC) had recently warned against the planned increase, with the NLC President, Joe Ajaero, stating that the massive rise will not bode well for Nigerians.
“We believe that not even these figures are a justification for this reckless proposed tariff increase. The issue of capacity to pay and quality of service delivery is not only germane but superior to any rationalisation by market logic,” Ajaero stated in a statement.
Emmanuel Addeh in Abuja
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