Nigerian govt set to 'regularise' electricity tariff

The Nigerian government on Thursday announced plans to regularise the country’s electricity tariffs.

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The move, according to the government, aims to address the significant disparity in tariffs between different consumer bands.

The Minister of Power, Adebayo Adelabu, disclosed this while speaking at the public presentation of the National Integrated Electricity Policy (NIEP) and Nigeria Integrated Resource Plan (NIRP) in Abuja on Thursday.

In April 2024, the Nigerian Electricity Regulatory Commission (NERC) announced a hike in electricity tariffs for Band A customers, noting that they are offered an average daily electricity supply of 20 hours, although many complain they do not get up to that.

The policy allowed distribution companies (DisCos) to raise electricity prices to N225 ($0.15) per kilowatt-hour from N68, in return for guaranteeing 20 hours of electricity supply per day.

At the time, the NERC Vice Chairperson, Musiliu Oseni, said the Band A consumers represent 15 per cent of the population but consume 40 per cent of the nation’s electricity. He noted that the increase would not affect Bands B, C, D, and E while noting that the number of customers previously on B and A has reduced.

In July 2024, DisCos proceeded with another hike and even upgraded more customers into the Band A category. Announcing the upward review at the time, the distribution companies said customers in Band A will now pay N209.5/kwh from N206.80/kwh.

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Speaking on Thursday, Mr Adelabu said the current tariff structure is unfair, with consumers in Band B paying N63 per kilowatt-hour for 17-18 hours of electricity supply, while those in Band A pay N209 per kilowatt-hour for 20 hours of supply.

He emphasised that any adjustments to the tariff structure will not exceed the current Band A rate. Instead, the goal is to regularise the tariffs across different bands, ensuring a more equitable and sustainable system.

“We’ll look at the tariff again. I’m not saying that we’re going to increase the tariff before I’m misquoted. We’re going to look at the tariff and see how we can improve upon our modest achievement of last year, not only to ensure that we grow the sector that we need but to also ensure that we’re able to invest more in revamping all these dilapidated infrastructures so that infrastructures that actually carry the kind of reliable electricity that we envisage for the sector.

“We’ll look at it. We thought the migration to B and A would be faster than what we’re having now, but we found out that the DisCos have refused to invest. They have refused to invest in this sector. Fine, it can be explained why, but a lot of investment is required for us to achieve an accelerated migration of lower-band customers into B and A.

“We’ll look at the other bands, which are B to E. Let’s pull up the bands to A, B, and C, so that we can actually, because the gap between the Band A tariffs and the Band B, Band C, D, and E is just too wide. It’s just too wide, and the Band B that’s enjoying 18, 17 hours is paying N63 while the one that’s enjoying just 20 hours, just two hours difference of supply, is paying N209.

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“So we believe it’s not fair. It is not just, and we must be able to carry out some level of regularisation. So this is not a tariff increase. Our tariff will never go beyond what a Band A is paying. But we need to regularise the tariff among the existing bands,” Mr Adelabu said.

He said the regularisation will be just, and it will come with minimal noise.

“Because a lot of Band A customers will say, downgrade us to Band B. If Band B can get 16 to 17 hours. Then they also pay something close. Nobody will come for downgrading to Band B again. So we are just trying to juxtapose the numbers and also engage. We are not announcing any increase in lower band tariffs yet,” he added.