Esther Salifu
Nigerian electricity customers on Band A feeders may face another tariff increase due to the rising electricity tariff shortfall, or subsidy.
The Federal Government’s subsidy payment rose from N102.30 billion in May to N181.63 billion in September.The Nigerian Electricity Regulatory Commission (NERC) removed subsidies for Band A customers in April, raising tariffs to N225 per kilowatt-hour.
However, tariffs were reduced to N206.80/kWh in May and increased again to N209/kWh in July.
The foreign exchange crisis drives the electricity subsidy, with the dollar exchange rate rising from N1,494.1 in July to N1,601.5 in September.
The NERC attributes the cost of power production to dollar rates and inflation. Despite the increased cost, the government has yet to approve another tariff hike, possibly due to economic hardship.
Electricity distribution companies are complaining about non-cost-reflective tariffs and refusing to off-take allocated electricity.
The Minister of Power, Adebayo Adelabu, urged distribution companies to take more energy to prevent grid collapse
According to the minister, generation peaked above 5,000 megawatts recently, but “unfortunately, it had to be ramped down by 1,400MW due to the inability of the Discos to pick the supply.”
Adelabu lamented the development, saying “This is really regrettable considering that the government is on course to increase generation to 6,000MW by the end of the year.”
He called on power distribution companies to take more energy to prevent grid collapse as the grid’s frequency drops when power is produced and not picked by the Discos.
An official of one of the Discos disclosed that the power companies were finding it difficult to pick the extra energy produced by generation companies because they were not happy with the tariff on other bands apart from Band A.“As it is now, we are operating at a loss.
Yes, they supply more power but this problem could be solved with improved tariff for the other bands and more meter penetration to recover the cost,” the Disco official, who pleaded not to be named due to lack of authorisation to speak on the matter, said.
