• Monday, April 22, 2024
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New electricity tariff to reduce 2024 subsidies by N1.14 trillion-NERC

The Nigerian Electricity Regulatory Commission (NERC) has said that with the newly approved tariffs, subsidies for 2024 are expected to reduce by about N1.14 trillion.

According to a statement issued by the management of the Commission on Wednesday, the tariff review was in furtherance of the Federal government’s realignment of the subsidy regime.

The Commission, in January 2024 had estimated that the federal government would pay N1.6 trillion on electricity subsidy in 2024 fiscal year.

Musiliu Oseni, the vice chairman of the Commission, who addressed a press briefing earlier had announced the new tariff under which customers in Band A, who are offered at least 20 hours electricity per day are expected to pay N225/kWh.

The Commission in the statement said that its overarching objective in the consideration of the tariff application is the creation of a financially sustainable electricity market providing adequate and reliable power supply to drive the Nigerian economy.

“The Commission, upon due consideration of the tariff applications, has approved revised rates affecting ONLY customers classified under Band A service category (about 15% of the customer population); empirical service data has confirmed that this class of customers have truly received the committed level of service.

“Under the revised tariff Order issued by the Commission, DisCos are under an obligation to provide customers classified under Band A service category a minimum average supply of 20hrs/day measured over a period of one week.

“All other customers under Band B to E service category and representing 85 percent of customers population would not be affected by the current review of end-user tariffs. All DisCos have been provided with mandatory targets for investments and migration of more customers to Band A service category.

“With the newly approved tariffs, subsidies for the 2024 fiscal year are expected to reduce by about NGN1.14 trillion in furtherance of the Federal Government’s realignment of the subsidy regime,” it stated.

According to the Commission, the determination of the new rates is subject to extensive reviews, having regard to the imperative for protecting customers while allowing investors to recover sufficient revenue to incentivize investments necessary for continuous improvement in service delivery.

It said that the government has indicated a transition in policy direction towards introducing a more targeted subsidy regime aimed at mitigating the impact of changes in macroeconomic parameters, while largely protecting vulnerable customers and fostering investments targeted at providing efficient service delivery in the Nigerian Electricity Supply Industry (NESI).

“The Commission has established a robust monitoring framework leveraging on technology to ensure that the public have visibility of the service covenant with their service providers. An enforcement and compensation mechanism has also been established, in the event of service failure.

“We wish to assure all Nigerians that the Commission working in collaboration with the policymakers remains committed towards providing adequate and reliable electricity to all citizens as we work diligently with state governments to deliver on the gains of the Electricity Act 2023,” it stated.