Nigeria: Why Govt Suspended New Electricity Tariff Hike
Minister of Power, Engr. Sale Mamman has directed the Nigeria Electricity Regulatory Commission, NERC, to suspend the recent hike in electricity tariff with immediate effect.
Recall that the Regulatory agency had on January 5, 2021, adjusted upward tariff review from N2.00 to N4.00 for some bands, while citing the partial impact of inflation and movement in foreign exchange rate.
Meanwhile, the Nigeria Electricity Regulatory Commission, NERC, said it was yet to carry out the minister’s directive by asking the DISCOs to reverse the electricity tariff to December 2020.
The NERC official who spoke with Vanguard on telephone said the commission received the minister’s directive just today.
The personnel who was furious when asked whether the commission received a formal directive on the issue, said: “I think the minister has given the directive? Is anybody denying that? We don’t conduct such transactions on the pages of newspapers”.
On whether the commission has reach out to the DISCOs to reverse to old tariff, he asked; I think you said the minister’s directive was issued today”, adding that “Regulatory process is not done on pages of newspapers.
“You received directive from the minister today and you want the commission to reach out to DISCOs today.
“You said the minister gave instruction today and you want to know if the commission has reached out to the DISCOs today, it is unfair”, he said.
However, the minister, who issued the directive earlier via a statement signed by his media aide, Mr. Aaron Artimas in Abuja, said the DISCOs should revert to tariffs applicable in December 2020 until the end of January 2021 when the Federal Government and Labour committee work will be concluded.
According to the statement, “On January 5th, 2021, the Nigerian Electricity Regulatory Commission,/NERC, issued a statement regarding erroneous and false reports by print and electronic media that approval had been granted for a 50% increase in tariff.
“I would like to affirm that these reports are inaccurate and false. It is unfortunate that these reports have led to confusion with the public.
“On the contrary, Government continues to fully subsidize 55% of on-grid consumers in bands D and E and maintain the lifeline tariff for the poor and underprivileged.
“Those citizens have experienced no changes to tariff rates from what they have paid historically (aside from the recent minor inflation and forex adjustment).
“Partial subsidies were also applied for bands A, B and C in October 2020. These measures are all aimed at cushioning the effects of the pandemic while providing more targeted interventions for citizens.
“The public is aware that FGN and the Labour Centers have been engaged in positive discussions about the electricity sector through an ad-hoc Committee led by the Minister of State for Labour and Productivity and Co-Chaired by the Minister of State for Power.
“Great progress has been made in these deliberations which are set to be concluded at the end of January 2021.
” Some of the achievements of this deliberation with Labour are the accelerated rollout of the National Mass Metering Plan, clamp downs on estimated billing, improved monitoring of the Service Based Tariff and the reduction in tariff rates for bands A to C in October 2020 (that were funded by a creative use of taxes).
“It should be clear to all that the regulator must be allowed to perform its function without undue interference.
“The role of the Government is not to set tariffs, it is to provide policy guidance and an enabling environment for the regulator to protect consumers and for investors to engage directly with consumers.
“Bi-Annual Minor reviews to adjust factors such as inflation are part of the process for a sustainable and investable NESI and the Regulator must be commended for implementing the subsisting regulations while putting in place extensive actions to minimize the adverse impact on end user tariffs.
“To promote a constructive conclusion of the dialogue with the Labour Centers (through the Joint Ad-Hoc Committee), I have directed NERC to inform all DISCOs that they should revert to the tariffs that were applicable in December 2020 until the end of January 2021 (when the FGN/Labour committee work will be concluded).
This will allow for the outcome of all resolutions from the Committee to be implemented together.
“The Administration is committed to creating a sustainable, growing and rules-based electricity market for the benefit of all Nigerians.
The Administration and the Ministry of Power will also continue to devise means to provide support for vulnerable Nigerians while ensuring we have a sustainable NESI.”
- Read original copy in Vanguard.