Economy
DISCOs Demands 200% Electricity Tariff Hike
By Ebitonye Akpodigha
Nigerians may have to be getting ready to pay more for electricity they consume, barely eight months they were earlier forced to do so by the government.
This is because power firms in the country are appealing to the Federal Government to approve another increase in electricity tariff by 200 percent.
They last increment done was by 45 percent, though there have been a slight improvement in electricity supply in some parts of the country. However, most consumers are yet to be metred by the power firms.
The power distribution companies fondly called DISCOs have written a proposal to the government, asking for the go-ahead to charge electricity consumers in Nigeria an average energy charge of N105 per kilowatt-hour from the current approved rate of 22.8KWH.
According to Punch, the DISCOs attributed their latest push for tariff increase to high inflation rate in the country, scarcity of foreign exchange, devaluation of the naira and the huge debts being owed them.
Already, they have hinted the Nigerian Electricity Regulatory Commission (NERC) about the proposal but no action had been taken on it yet.
Chief Executive Officer, Association of Nigerian Electricity Distributors, an umbrella body for the DISCOs, Mr Azu Obiaya, confirmed the latest agitation for tariff increase, in an interview with our correspondent, stressing that it was important to raise the tariff in order to remain in business and serve the people well.
Mr Obiaya said, “To review the tariff, we will be looking at an average rate of N70 per kilowatt-hour for residential consumers. But some Discos will like to have the rate as high as N105/kWh.”
Each Disco has a fixed energy charge payable by its customers. The highest charge, according to documents obtained by our correspondent from NERC for the year 2016, is N32.26/KWH and this is payable by R2 consumers under the Jos Electricity Distribution Company.
The lowest energy charge of N15.83/KWH is payable by R2 customers who get power from Ikeja Electricity Distribution Company.
A further analysis shows that the average energy charge for all the 11 Discos is N22.8/KWH.
But the Discos were said not to be comfortable with the current rate, as they argued that it was not cost reflective and was hampering the required expansion of infrastructure as well as the smooth flow of operations.
Mr Obiaya, who spoke to our correspondent on the sidelines of a power dialogue in Abuja on Thursday, said the debts owed power distribution companies by private homes, businesses and government ministries, departments and agencies post-privatisation amounted to N568bn.
He also stated that one reason many Discos had not metered their customers was due to the huge debts owed them, as well as the tariff issue.
This, he said, had hampered the operations of the different Discos, a development that had made it difficult for the companies to meet the funds remittances required of them by the Market Operator.
Mr Obiaya said, “Discos are experiencing revenue shortfall on a monthly basis of N38bn. As of June 2016, the MDAs owed the Discos N53bn post-privatisation.
“The books of the Discos are so bad that they have no chance anymore to access finance. These books do not reflect the cash flow that is necessary for them to be taken seriously by any lender.”
A senior official at NERC told our correspondent that although the Discos had been calling for an upward review in tariff, the regulator had not considered their demand.
“The minor review of tariff is ongoing at present but NERC has yet to consider their plea for such increase in tariff, although the economic fundamentals in Nigeria have seriously changed and are now so high,” the official said.
When contacted, the National Secretary, National Electricity Consumers Advocacy Network, Mr Obong Eko, stated that NECAN would never support such move.
He described the move as the peak of insensitivity to the flight of Nigerian masses.
He said, “They’ve been flying the kite for some time now because the last time tariff review was done was when the exchange rate for one United States dollar was about N190. But now, one dollar is close to N500; and the price of gas in the international market has gone up too.
“Despite all these, it will still be so unreasonable to come out to announce an increase in tariff now that Nigerians are going through severe suffering. Are they aware that people are dying of hunger? We can never support such move and we will resist it.”
By Adedapo Adesanya
Afriland Properties Plc helped the NASD Over-the-Counter (OTC) Securities Exchange record a 0.04 per cent gain on Tuesday, December 10 as the share price of the property investment rose by 34 Kobo to N16.94 per unit from the preceding day’s N16.60 per unit.
As a result of this, the market capitalisation of the bourse went up by N380 million to remain relatively unchanged at N1.056 trillion like the previous trading day.
But the NASD Unlisted Security Index (NSI) closed higher at 3,014.36 points after it recorded an addition of 1.09 points to Monday’s closing value of 3,013.27 points.
The NASD OTC securities exchange recorded a price loser and it was Geo-Fluids Plc, which went down by 2 Kobo to close at N3.93 per share, in contrast to the preceding day’s N3.95 per share.
During the trading session, the volume of securities bought and sold by investors increased by 95.8 per cent to 2.4 million units from the 1.2 million securities traded in the preceding session.
However, the value of shares traded yesterday slumped by 3.7 per cent to N4.9 million from the N5.07 million recorded a day earlier, as the number of deals surged by 27.3 per cent to 14 deals from 11 deals.
Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units sold for N3.9 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units worth N5.3 million.
Also, Aradel Holdings Plc remained the most active stock by value (year-to-date) with 108.7 million units worth N89.2 billion, followed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units sold for N5.3 billion.
By Adedapo Adesanya
The Naira continued to appreciate on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM), gaining 0.7 per cent or N10.23 on Tuesday, December 10 to trade at N1,542.27/$1 compared with the preceding day’s N1,552.50/$1.
The Central Bank of Nigeria (CBN)-backed Electronic Foreign Exchange Matching System (EFEMS) platform introduced to tackle speculation and improve transparency in Nigeria’s FX market has been attributed as the source of the Naira’s appreciation.
Speculators holding foreign currencies, particularly the US Dollar, have seen the value of their money drastically drop due to the appreciation of the local currency. This is forcing them to dump greenback into the system and take the domestic currency alternative- a move that has seen available FX increase.
Equally, the domestic currency improved its value against the Pound Sterling in the official market during the trading day by N6.81 to sell for N1,955.12/£1 compared with Monday’s closing price of N1,961.93/£1 and against the Euro, it gained N10.84 to close at N1,613.00/€1, in contrast to the previous day’s rate of N1,623.84/€1.
Data from the FMDQ Securities Exchange showed that the value of forex transactions significantly increased yesterday by $228.85 million or 257.2 per cent to $401.17 million from the preceding session’s $112.32 million.
However, in the parallel market, the Nigerian currency weakened against the US Dollar on Tuesday by N5 to settle at N1,625/$1 compared with the previous day’s value of N1,620/$1.
In the cryptocurrency market, Dogecoin (DOGE) lost 4.8 per cent to sell at $0.39116, Litecoin (LTC) depreciated by 3.3 per cent to trade at $110.25, Binance Coin (BNB) went south by 2.3 per cent to $681.44, Ethereum (ETH) dropped 1.6 per cent to finish at $3,671.08, and Cardano (ADA) slid by 0.5 per cent to $0.8837
Conversely, Ripple (XRP) jumped by 5.4 per cent to $2.23 amid a continued shift for the coin with its parent company seeing the benefits of a crypto-friendly regulatory environment for US-based companies.
XRP is closely related to Ripple Labs, a high-profile payments company targeted by the SEC in 2020 on allegations of selling the token as a security to U.S. investors. Ripple fully cleared a long-drawn court case in 2024.
Further, Solana (SOL) expanded by 0.8 per cent to $219.75, Bitcoin (BTC) grew by 0.4 per cent to $97,446.95, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
Oil prices rose on Tuesday, influenced by increasing demand in China, the world’s largest buyer, as well as developments in Europe and Syria, with Brent crude futures closing at $72.19 per barrel after chalking up 5 cents or 0.07 per cent while the US West Texas Intermediate finished at $68.59 a barrel after it gained 22 cents or 0.32 per cent.
China will adopt an “appropriately loose” monetary policy in 2025 as the world’s largest oil importer tries to spur economic growth. This would be the first easing of its stance in 14 years.
Chinese crude imports also grew annually for the first time in seven months, jumping in November on a year-on-year basis.
Speculation about winter demand in Europe also contributed to the rise in prices as the period has been known for high demand.
In Syria, rebels were working to form a government and restore order after the ousting of President Bashar al-Assad, with the country’s banks and oil sector set to resume work on Tuesday.
Although Syria itself is not a major oil producer, it is strategically located and has strong ties with Russia and Iran – two of the world’s largest oil producers.
Market analysts noted that the tensions in the Middle East seem contained, which led market participants to price for potentially low risks of a wider regional spillover leading to significant oil supply disruption.
The market is also looking forward to the US Federal Reserve, which is expected to make a 25 basis point cut to interest rates at the end of its December 17-18 meeting.
This move could improve oil demand in the world’s biggest economy, though traders are waiting to see if this week’s inflation data derails the cut.
Crude oil inventories in the US rose by 499,000 barrels for the week ending November 29, according to The American Petroleum Institute (API). Analysts had expected a draw of 1.30 million barrels.
For the week prior, the API reported a 1.232-million barrel build in crude inventories.
So far this year, crude oil inventories have fallen by roughly 3.4 million barrels since the beginning of the year, according to API data.
Official data from the US Energy Information Administration (EIA) will be released later on Wednesday.
Also, the market is getting relief from the recent decision of selected members of the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ to delay the rollback of 2.2 million barrels per day of oil production cuts to April from January. Another 3.6 million barrels per day in output reductions across the OPEC+ group has been extended to the end of 2026 from the end of 2025.
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