Why we Want Nigerians to Pay More for Electricity—NERC

By Adedapo Adesanya

The Nigerian Electricity Regulatory Commission (NERC) has explained why it came up with an upward review of electricity tariffs that would be paid by consumers in the country.

In a statement signed by the General Manager of Public Affairs at NERC, Dr Usman Abba Arabi and published on its website, it was disclosed that while the commission was yet to approve the other tariffs plan, what is being reported in some sections of the media were merely a review of the 2015 tariff regime to account for changes in macroeconomic indices between 2016 and 2018.

Explaining the new tariffs, NERC spokesman noted that the minor review implemented was a retrospective adjustment to reflect some economic fundamentals.

According to the documents uploaded on the NERC website, the new tariffs are in line with the changes in relevant macroeconomic variables, and the available generation capacity in updating the operating 2015 Multi-Year Tariff Order (MYTO).

NERC further disclosed that the minor review came as a result of revenue shortfall that might have arisen due to the difference between tariffs approved by the regulator and actual end-user tariffs.

The breakdown of revenue shortfall included in NERC reports shows that the entire 11 Distribution Companies (DIsCos) in Nigeria recorded revenue shortfall of N1.05 trillion between 2015 and 2018.

According to NERC, under the Power Sector Recovery Plan (PSRP) approved by the Federal Government, all accrued liabilities in DisCos’ financial records arising from tariff shortfalls shall be transferred off the balance sheet and fully settled under the financing plan of the PSRP initiative.

Also included in the NERC report is a new order directing all the ministries and agencies of government (MDAs) to be metered by DisCos. A further review of the report suggests that the revenue shortfall experienced by the DisCos might be traceable to the refusal of the MDAs to pay their bills, and NERC appears to have fully empowered DisCos to do the needful in enforcing revenue collection.