Hike in electricity tariff imminent as NERC sets to conclude extraordinary review

Wale Ameen
Online Editor

Nigerians may be in for some tougher times ahead as there is an imminent increase in electricity tariff soon. This is in view of the move by the Nigerian Electricity Regulatory Commission to commence the process for the July 2021 Minor Review of the Multi Year Tariff.

This is contained in a statement it issued on Monday, April 26, 2021 and made available via its website.

According to the statement, due to its inability to conclude on the requests of Discos for a review of the Capital Expenditure proposed in their PIPs earlier in the first quarter of 2020 and in accordance with the EPSRA and other extant industry rules, it is set to embark on an Extraordinary Tariff Review process for Nigeria’s eleven DisCos.

It will also commence the processes for the July 2021 Minor Review of MYTO – 2020 to consider changes in the above mentioned variables to come up with a reviewed tariff pricing.

Part of the statement reads:

“Pursuant to the provisions of the Electric Power Sector Reform Act (EPSRA), the Nigerian Electricity Regulatory Commission (“NERC” or “the Commission”) adopted the Multi-Year Tariff Order (MYTO) Methodology in setting out the basis and procedures for reviewing electricity tariffs in Nigeria. The MYTO provides for Minor Reviews (every 6 Months), Major Reviews (every 5 years), and Extraordinary Tariff Reviews in instances where industry parameters have changed from those used in the operating tariffs to such an extent that a review is urgently required to maintain the viability of the industry.

Further to the above, the Commission held series of Public Hearings and stakeholder consultations in the first quarter of 2020 on the Extraordinary Tariff Review Applications of the eleven (11) electricity distribution companies (“DisCos”) to consider their respective 5-year Performance Improvement Plans (“PIPs”).

However, the evaluation of the DisCos’ requests for review of the Capital Expenditure (“CAPEX”) proposed in their PIPs could not be concluded for the consideration of the Commission during the Minor Reviews undertaken in 2020. Specifically, Section 21 of the MYTO – 2020 Order provides for consideration of DisCos’ CAPEX application upon further scrutiny and evaluation of the investment proposals.

Accordingly, this notice is issued to inform the general public and industry stakeholders of the Commission’s intention to:  Conclude the Extraordinary Tariff Review process for the eleven DisCos;
Commence the processes for the July 2021 Minor Review of MYTO – 2020 to consider changes in inflation, foreign exchange, gas prices, available generation capacity, and CAPEX required to evacuate and distribute the said available generation capacity in accordance with EPSRA and other extant industry rules.”

It thereafter called on stakeholders and the general public public to send in the comments to the Commission within 21 days from the date of publication.

Agitation by DisCos to increase tariff has been building up since the last quarter of last year when there was a sharp hike in price but this was subsequently called off by the Federal Government following labour’s threat to embark on a nation wide strike to protest the increment.

The suspension was later extended by one week with intervention from the leadership of the House of Representatives.