There are indications that the eleven electricity Distribution Companies, DISCOs, is set to enter a new tariff regime by September 1.
This will see them increase tariffs structure by about N2 across their network by September 1, 2021.
Postpaid customers will start paying this tariff in October after they receive their September bills. However, prepaid customers who buy energy in September will experience tariff increases immediately.
The Nigerian Electricity Regulatory Commission (NERC) has sent a circular to had issued a new tariff order to the DISCOs and Electricity Generation Companies (GenCos), informing them of the approval to increase electricity tariffs.
About the tariff order
Available information revealed that inflation rate, foreign exchange, generation capacity and gas prices are among the major factors considered in increasing electricity tariffs.
NERC stated that the inflation rate used for January to May was 17.7% while they adopted 17.93% for the second half of the year. The inflation rate in Nigeria is currently 17.38%. US Inflation rate was adjusted to 4.2% in the second half of the year from 3.1% between January and May.
On the exchange rate, NERC reveals it used N405.14/$1 between January and May 2021 and has now adjusted it to N410 for the second half of the year.
Generation Capacity was adjusted to 5,267MW/h for September to December 2020 compared to 4,646 MW/h used for January- August 2021. This suggests NERC expects power consumption and availability to increase in the latter part of the year.
Gas prices including the cost of transportation adopted was $2.98/MMBTU. Other factors used to justify the increases were capital expenditure requirements and operational expenses expectation of the DisCos.
Although, the DISCOs are yet to make a public announcement to their customers, same as NERC.