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New Nigeria electricity tariff aimed at cost reflective pricing

Barth Nnaji,
Minister of Power
5 June 2012 – As of the first of June Nigeria introduced a new electricity tariff regime, which minister of power Barth Nnaji says is formulated to stabilise the sector as well as attract the private investments required to drive the sector in the medium to long term.

The new tariff regime will increase the price of electricity by an average of 11%. Chairman of the National Electricity Regulatory Commission, NERC, Sam Amadi, says, “The tariff is structured to attain cost-reflective pricing that will ensure private sector investment in the generation, distribution and transmission of power in the country.”
Amadi says that private sector participation is central to the country’s power sector reform programme aimed at transforming the sector in line with the NERC’s mandate to ensure adequate and affordable electricity to every Nigerian. Under the new tariff regime, different classes of consumers will pay different rates applicable to their classes for their electricity supply, “Low income earners who use less electricity will pay less than high income earners who consume more electricity.”
He says that all electricity consumers will be metered within a maximum of 18 months, adding that all distribution companies (DISCOs) have been asked to submit their meter installation plans to the commission in order to receive the meter component of the tariff. “This will deal with the perennial billing fraud suffered by many electricity consumers through estimated billing. A methodology to ensure accuracy of estimated billing is being designed by NERC to further protect the rights of customers and prevent over-billing while estimated billing is being phased out.”

Appearing before the House of Representatives in Nigeria, Nnaji said recently, “To solve the problem of power we cannot be talking of marginal increases. Certain measures have to be taken. Electricity is not a product of parties or an issue to be played with using politics or party ideology but something that concerns everybody. We buy the product and it has to be priced accordingly.”
The new tariff dubbed Multi Year Tariff Order (MYTO) II will last for five years, but will be subject to review based on inflationary trends.