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FG’s hike in electricity tariff by 50% worrisome without commensurate power

Strong indication has suggested that directive from the Nigeria Electricity Regulatory Commission (NERC) to electricity Distribution Companies (DisCos) ordering them to hike their tariffs by an average of 50 per cent come April 1 is a way of running away from cancelling the 2013 privatisation. However, checks revealed that the hike is coming when there has been no sign of improvement in power supply, a ploy many Nigerians described as day light robbrey and annihilation of the citizenry. Other see the development as lack of protective concerns on citizens on the side of the government.

Besides, it was not clear if the deal will play out as the first time the idea came up, the National Assembly passed a resolution outlawing any form of tariff hike pending when power supplies have improved.

Before now, there had been massive calls on the government to revoke the concessions on grounds of inactivity of the Discos, but instead of either revoking their licences or recapitalising them, government resorted to allowing them to rip off Nigerians with 50% tariff hike from April.

Reacting to the memo from NERC, the management of Ikeja Electric (IE) Plc said,  the directive was in place, in order  for them to meet the tariff shortfall funding targeted for 2020 by the government.

The Chief Executive Officer, Antony Youdeowei reacting to the order disclosed that directive on the tariff increase is expected to raise the average tariffs from the current level of 27.30 N/kWh to 40.95 N/kWh.

He also claimed that they have informed the commission that in line with the directive they have designed the tariffs based on the MYTO tariff model contained in the document, Ikeja DisCo Tariff Model Jan 2020.

“In this application, we intend to create a new tariff class, called Bilateral; a class that is being created for customers that IE has a signed Power Purchase Agreement (PPA) with under a willing-buyer-willing seller arrangement.

NERC meetingIn order to provide an efficient and reliable service to customers in this tariff class, cost-reflective tariffs are required to cover the cost of service delivery.

They said, there total bilateral energy procured is currently 200MW, however, bilateral sales in the application is only the portion of the bilateral energy that has been contracted with customers on a willing-buyer-willing seller arrangement.

The power firm said, that the expected MYTO 2020 and bilateral revenue requirement are collected sales (GWh) in MYTO is 3,955mw, and bilateral 161mw, total 2020 for 4,116mw.

According to IE, the collected energy sales based on the 50 per cent tariff increase in MYTO is 3,955GWh, while of the bilateral sales is 161GWh.

It also noted that the expected MYTO 2020 and bilateral revenue requirement, are N162billion and N8billion respectively, to give a total revenue requirement of N170billion.

The IE said that the “50 per cent tariff increase is expected to raise the average tariffs from the current level of 27.30 N/kWh to 40.95 N/kWh.”

The document added that “the addition of bilateral sales revenue requirement further increases the average tariffs to 41.31N/kWh. Over the next five years (2020-2024), we have assumed the bilateral revenue requirement forms part of the title allowed revenue,” IE averred.