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.

AEDC Urges Customers to Disregard Planned Tariff Increase

The Abuja Electricity Distribution Company (AEDC) has appealed to its customers to disregard planned tariff increase as approval for such increment had not been received.

AEDC management made the appeal in a statement yesterday in Abuja.

“Please disregard the circulating communication, regarding review of electricity tariffs.

“Be informed that no approval for such increments has been received. We regret any inconvenience.”

However, AEDC had earlier in a statement, said   there would be an upward review of electricity tariff from July 1.

According to the statement, the tariff increase is influenced by the fluctuating exchange rate.

“Effective July 1, 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 dollar may now be revised to approximately N750/1 dollar 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 Kilowatts per hour (KWh).

“While Bands A with (20 hours and above) and B (16 to 20 hours) will experience comparatively higher tariffs, ‘’it said.

AEDC encouraged customers with prepaid meters to consider purchasing bulk energy units before the end of June as this would allow them take advantage of the current rates and   make savings before the new tariffs came into effect.

AEDC said that for those on post-paid (estimated) billing, a significant increment is imminent in their monthly billing, starting from August.

The Mult Year Tariff Order (MYTO) is the methodology for regulating electricity prices.

It provided 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.

These included inflation and gas prices and ‘major’ reviews every five years when all of the inputs were reviewed with stakeholders. (NAN)

Manufacturers Decry Hike, Demand Subsidy

The Manufacturers Association of Nigeria (MAN) has come out to express its displeasure and kick against the nationwide increase in electricity tariff by 40%, saying that the sector was uncompetitive due to high prices used to generate electricity amongst other things.

MAN also pointed out that in the last 8 years of the previous administration, electricity tariffs had gone up by 186%.

President of the Manufacturers Association of Nigeria (MAN), Otunba Francis Meshioye, who stated this in an interview with ARISE NEWS yesterday, said that energy payments had consumed 30% of revenues brought out of the industry and is going to cause a high cost of performing business within the nation causing a lack of competition.

“There is no special subsidy we have asked for in the past that we have not addressed.  What we had in the past was to have a price fixed over the period of time. We have not really complained so much about this price. The major thing to access ks that within the period where this price was increased and it was a time where we have not agreed that the price should be increased. This cost should ot be passed on to the manufacturers.

“It was increased two times before the time. This made them (MAN) have crude debts to the DisCos. This is what we’re telling government; that this should not be added to our costs because is not what we agreed on.”

Meshioye described the increase as outrageous saying, “This has been an issue over the time. What we have been experiencing is intimidation over our businesses. They will go to our businesses, disconnect the electricity and then nothing will happen.”

As a solution to the imbalance, the MAN president asked that ‘special rates’ should be allotted to manufacturing companies  as well  as privatization of electrical distribution companies to allow them cope with the increase ensuring that this would  bring in investors and encourage competition.

“Encouraging private sectors to invest is very key. That will add competitiveness in the supply value chain of the electricity.

 “One, be sure that you meter everyone and ensure they are connected to the grid. Run an efficient system and encourage competitiveness. Look for alternate source of emitting power.

“Apart efficiency in the supply chain, what manufacturing could do using gas and everything. Let me tell you, we don’t have a special tariff on gas so we enjoy seriously. But you remember that manufactures have even complained to NERC on a couple of things. We have road map on how the tariff should be increased. But you find that NERC will just increase it without consultation and without the due time before this tariff should be increased. So you find haphazard way of increasing the tariff.

“This is unfair. We need to be sure that if we agreed on a road map, you follow that road map”

Asides the electricity tariff increase, the MAN president stated that other factors affecting the expansion of the sector include multiple taxation from various arms of government at both state and local level who taxing for the same goal; logistics from ports which can cause delays, ineffective transportation systems and  “astronomically high” interest rates.