21 May 2010 – In Nigeria, the Multi Year Tariff Order (MYTO) was introduced by the Nigeria Electricity Regulatory Commission in 2008. Stakeholders in the power sector convened in Abuja to work out modalities to review the MYTO. What the MYTO does is provide a 15 year tariff path for the electricity industry, with major reviews each year in the light of changes in a limited number of parameters such as inflation, exchange rate and gas prices.
It also provides major reviews every 5 years when all inputs are reviewed with electricity stakeholders.
Administrator of NERC, Immamudeen Talba, said at the meeting that, "the minor review we are about to conduct today (yesterday) will only affect the wholesale price and not the retail tariff."
He said consumers should not expect any increase in their tariff beyond what was approved in 2008.
He explained that MYTO was established to guarantee reasonable returns to investment in the country’s electricity market and also promote the effective principle of availability and access to power.
"It is important to note that in spite of the huge potentials for power generation in the country, generation capacity has been very low with investors still complaining about low tariff and other constraints", Talba said.
He said the MYTO was first reviewed in July, 2009 to reflect the significant changes in the underlying parameters of inflation, exchange rate and gas price.
"While the changes in gas price was in line with the gas to power policy of the federal government, inflation and exchange rates recorded significant increases of 30.91 percent and 17.60 percent respectively", he said.
Head of market competition and rates division of NERC, Dr. Haliru Dikko, said preparatory to the annual minor review, the commission had issued a notice requesting for comments from stakeholders in the industry on variables like rate of inflation, exchange rate and gas price.
According to him, NERC also requested for statistics from the Central Bank of Nigeria and the National Bureau of Statistics on inflation and exchange rates for the period of March.
The statistics obtained shows an inflation rate of 11.80 percent as at March with an exchange of N149.83 within the same period.
A draft time-table for the major review which was made available during the meeting indicates that the next stage of the MYTO review process involves a presentation by NERC on review of methodology for pricing of generation, transmission and distribution.