Electricity Tariff Increases By 58% After ₦500bn Subsidy Suspension – Report

The electricity tariffs increased by 58 percent after the Federal Government suspended the yearly ₦500bn power subsidy.

Naija News reports that the Association of Nigerian Electricity Distributors (ANED) disclosed this in a report titled, ‘Analysis of the Commercial KPIs for ANED ́s Members/2021’.

ANED said the suspension of the power subsidy in 2020 led to the Nigerian Electricity Regulatory Commission to equally increase tariffs from ₦31/kWh to ₦49/kWh starting from last year.

The association stated that the new tariffs were for customer categories under the class A, B and C, adding that they were for better service.

It said with the effective implementation of the Service-Based Tariff in November 2020, the Federal Government removed electricity subsidies of over ₦500bn and “allowed tariff increase from 31 N/kWh up to 49 N/kWh in 12 months.”

Hence, electricity tariffs have increased by ₦18/kWh since the subsidy removal, according to the document obtained by The Punch.

The report showed that while the Nigerian Electricity Supply Industry, NESI’s cost of the service had grown from ₦1.15trn in 2019 up to ₦1.8trn in 2021 (and weighted generation cost has gone up from ₦23/kWh in 2019 to ₦27/kWh), NESI’s cost-reflective tariff in 2021 was 5 N/kWh cheaper than in 2019.

The ANED said, “It truly does not make any sense that, while the generation cost and other costs continue to grow at NESI, the cost-reflective tariff is systematically and artificially reduced.”

It, however, said despite the increment in the generation, transmission and administrative costs, the cost-reflective tariff had been decreased mainly due to a continuous reduction in the regulated ATC&C losses under the Multi-Year Tariff Order.