NERC Announces Tariff Increase for Band A Electricity Customers in Nigeria

Apr 4, 2024

Nigeria’s Electricity Regulatory Commission (NERC) has recently announced an increase in the tariff payable by electricity customers under the band A category(up to 20 hours of electricity a day). The new tariff will be N225/kWh, up from N68/kWh(a 300% jump). According to NERC, this category of customers constitutes about 15% of the total Nigerian electricity customers.

The tariff increase is reportedly due to the recent increase in the base price for natural gas from $2.18 to $2.42 per metric million British thermal unit (mmbtu) by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). This month, the federal government will allow electricity distribution companies to raise prices to N145 ($0.15) per kilowatt-hour for Band A customers from N68 naira.

Despite the privatization of the power company into 11 distribution companies (DisCos) and multiple generation companies (GenCos) in 2013, there is a debt burden. The federal government does not allow DisCos to charge enough to recover the cost of distributing electricity, with the government paying the difference as a subsidy to companies in the sector. Electricity subsidies gulped around N50 billion naira monthly.

NERC has assured a speedy provision of meters across these customers to ensure they are not over-billed, especially in the new era. NERC also clarified that the metering rate in this category is up to 80 percent. However, despite these measures, the electricity sector remains a challenge. It is crucial for the government to attract new investors to revive the industry and ensure a sustainable future for the sector.

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