Nigerian government cuts electricity tariff by half

The Nigerian government has announced a reduction in electricity tariffs by half.
The Nigerian Electricity Regulatory Commission on Wednesday announced the immediate review of electricity tariffs by about 50 per cent.

The Chairman of the Commission, Sam Amadi, who announced the review in Abuja, said the reduction, which takes effect from the end of March, followed the regulatory agency’s decision to remove collection losses from customer tariff under the multi-year tariff order.

Mr. Amadi said following the approval of the multi-year tariff order, MYTO 2.1 in January 1, 2015, the Commission had received several complaints and petitions against the decision, which resulted in astronomical increases in tariff across the different consumer categories.

He noted particularly the petition by industrial and commercial consumers under the auspices of the Manufacturers Association of Nigeria, which demanded a drastic reduction of their tariffs.

The two categories of consumers had cited the negative impact of their increased tariffs, which they said were threatening their businesses, leading to massive job losses.

Following the review of the petitions, Mr. Amadi said the Commission conducted public hearings to gather evidence from all consumer classes on the affordability of the new tariff.

Again, he said the Commission had consulted with the Chief Executive Officers of the Distribution Companies before deciding to intervene by reviewing the tariffs.

Besides, the Chairman said the Commission also decided to review the technical and financial assumptions of multi-year tariff order 2.1.

The reviews, he noted, were in line with the provisions of the Electricity Power Sector Reform Act 2005 and the Business Rules of the Commission’s mandate, which allow such a decision on a petition by an interested party within 60 days.

He said findings from the various reviews showed that the major cause of the spiralling consumer tariffs was the huge aggregate technical commercial and collection losses.

Some distribution companies have complained that the collection losses, which are passed to consumers, raised the final tariffs by as much as an average of 80 and 103 per cent.

“The Commission has been listening to consumers’ complaints and taking full account of the impact of the high tariff on consumers and the Nigerian economy,” Mr. Amadi said.

“Therefore, the Commission has reviewed the basis of the MYTO 2.1 assumptions and has determined that it is inappropriate to transfer to consumers collection losses that are controllable by the DISCOs (distribution companies),” he announced.