|Chairman of NERC, Dr. Sam Amadi|
Monday, 14 December 2015
New Electricity Tariff out This Week, Says NERC.
Nigerians will this week know the new tariff for electricity, the Nigerian Electricity Regulatory Commission (NERC) said at the weekend.
The regulatory agency said at a workshop in Abuja that it had considered the submissions of the 11 electricity distribution companies (Discos) in Nigeria’s electricity market, and would after a final regulatory meeting in the week, announce the new rates.
The Chairman of NERC, Dr. Sam Amadi, said the regulator had held meetings with the Discos to finalise their respective tariff proposals. He said that the commission had also got feedbacks from both government and the Discos and would now conclude the process.
“We have gone to the Discos, gotten feedback; gone to government and gotten feedback. We have not finalised. In our view, we have basically done the crunching of numbers,” he said, adding: “It is not about tariff increase, it is also not about their financial outlay. We have done the technical work, remaining the regulatory work. By next week, we should sign off on the new tariff.”
Amadi’s disclosure follows that of Minister of Power, Works and Housing, Mr. Babatunde Fashola, who last week announced that NERC and the 11 Discos had been directed to meet and come up with what he described as a fair market tariff.
Fashola had said that the new tariff was key to reliable electricity supply in the country, appealing to consumers to accommodate the incoming increase with some benefit of doubts on the government’s sincerity to enthrone a fair tariff regime in the sector.
He pointed out that a good tariff system guarantees good power supply and drew close analogy to what happened in the country’s telecoms sector when it was privatised in 1999.
Fashola stressed that the sector would eventually plateau to allow supply and tariffs gain commercial values.
“Without a tariff system, there will be no power. A fair market tariff is expected to be announced by the regulator after meeting with the distribution companies. When the new tariff comes, please conserve light. We must pay for what we consume whether we like it or not,” he had said.
He also noted that the Discos must commit to certain key performance conditions, including providing prepaid meters and expansion of network in line with the proposed new tariff order.
NERC also noted that the revenue shortfall that accumulated with its freezing of the Residential 2 (R2) class tariff earlier in the year when it approved a cost-reflective tariff in the Multi Year Tariff Order 2.1 (MYTO) would be incorporated in the new tariff to enable the operators recover their cost of supplies to consumers.
One of its tariffs and rates officials, Aisha Mahmoud, in her presentation at the workshop said: “We calculated the shortfall accruing to the freeze of the R2 and we incorporated it in the tariff because that’s part of the revenue of the operators and they have to recover it one way or the other.”
On the huge accumulated debts owed the Discos by government’s Ministries, Departments and Agencies (MDAs) as well as the military and the police, amongst other security formations, NERC said they would soon be liquidated.
According to the Discos, the debts owed for supply of electricity to these classes of consumers have overtime risen so high that they now negatively impact their operations.
“The last government through the Secretary to the Government of the Federation gave some instructions directing that the Accountant General’s Office should be deducting at source when we wrote and complained about the huge debts,” Amadi said.
But he explained that the directive had not been effectively implemented. “But right now in the new tariff we have discounted those MDA debt from their collection losses with the commitment that it will be paid and government is working on that,” the NERC chairman said.
Amadi said his commission had proposed a number strategies to the National Assembly to prevent government agencies from owing electricity companies. “We said they should adopt the earmark strategy in the US, which means each MDAs budget should have clear earmark for paying electricity bills and those earmarks means you put in conditions that the money cannot be used for something else, if used for another thing it would mean a violation of the law.”
Meanwhile, the Presidency has intervened in the lingering dispute between Geometric Power and Enugu Electricity Distribution Company over the lease agreement granted to the 141 megawatts (MW) Aba Power Plant.
Amadi in his response to a question on the state of NERC’s intervention on the issue, said that NERC had developed a settlement plan, which the Presidency was reviewing for adoption.
He said Vice-President Yemi Osibanjo had held a meeting with the parties preparatory to eventual resolution of the issue, adding that he expected a win-win resolution of the issue soon.
“I have been mandated to draw out a settlement plan. We have done that and completed it. It is now at the VP’s office. NERC’s framework is to be adopted and reviewed as an out of court,” he stated.
Geometric, which operates the 141MW Aba Power, was founded by a former Minister of Power, Prof Barth Nnaji. The company is presently at loggerheads with the Bureau of Public Enterprises (BPE), which sold the Aba and Ariaria Business Districts of the Enugu Electricity Distribution network to Interstate (new owners of Enugu Electricity Distribution Company) in spite of a 2005 deal that ring-fenced and concessioned the units to Geometric.