The Nigerian Electricity Regulatory Commission (NERC) has explained why it approved an increase in tariff, arguing that it considered economic factors to arrive at what it said was a minor review.
NERC justification comes as a Federal High Court sitting in Lagos ordered a temporary stop to the hike pending the determination of a motion seeking to entirely stop the new tariff from coming into effect at all.
The “minor” review which NERC said is on hold to allow for consultations, but which electricity distribution companies (DISCOs) have said will come into effect from April 1, 2020, will have some consumers paying as much as a 78% increase on their current charges.
NERC statement on Wednesday reads:
“The attention of the Nigerian Electricity Regulatory Commission (the “Commission”) has been drawn to reports in the media that an immediate increase in end-user electricity tariffs has been approved by NERC.
“The Electric Power Sector Reform Act provides that the Commission shall determine and periodically review electricity tariffs charged by the electricity distribution companies (DisCos) and to provide an opportunity for utilities to recover efficient costs of operation and a reasonable return on investment. The current tariff methodology adopted by the Commission provides for a determination of a tariff trajectory over a 5-year planning horizon and biannual minor tariff reviews taking into account the impact of inflation, rate of foreign exchange, gas prices and energy available to consumers.
“The minor review Order released by the Commission on January 3, 2020 has no immediate impact on end-user tariffs payable by all classes of electricity customers in the country. The order is to establish the impact of the exogenous macroeconomic parameters and costs outside the control of the utilities in the year 2019 and projections for 2020. The macroeconomic indices taken into consideration to conclude this exercise include rate of inflation, foreign exchange, gas price and volume of available electricity. The Order has further prescribed minimum market remittance threshold payable by the eleven electricity distribution companies and the projected tariff path until 2021.
“However, where actual end-user tariffs are likely to be impacted by the review, the required public and stakeholder consultations shall be implemented in line with requirements of the Electric Power Sector Reform Act and Business Rules of the Commission.”
At the court, Justice Hassan ordered that the “the status quo ante bellum shall be maintained by the parties in this suit pending the determination of the motion on notice.”
The Incorporated Trustees of Human Rights Foundation filed the suit to stop the tariff hike against NERC, the Bureau of Public Enterprises (BPE); the Nigeria Bulk Electricity Trading Company Plc; the Minister of Power and 11 electricity distribution companies.
The NGO is of the opinion that allowing the hike will bring hardship to Nigerians and other consumers.
It adds, “It will amount to a great injustice to impose arbitrary electricity tariff on Nigerian electricity consumers.
“Nigerians will suffer monumental loss as many people will not be able to access power or access same at very high tariff. I know that Nigerians are entitled to access public amenities like electrical power.”