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The Nigeria Electricity Regulatory Commission (NERC) has explained that the commission raised electricity tariffs due to challenges faced by generation companies in covering gas expenses and maintaining their equipment.
Musiliu Oseni, the Deputy Chairman of NERC made these remarks in an interview on Channels TV’s Politics Today.
Additionally, on the same day, the commission sanctioned the hike in electricity tariffs for customers categorized under Band A.
Consequently, customers under this classification will now be charged N225 per kilowatt-hour, up from the previous rate of N66.
But, during the interview, Oseni said that if nothing is done to ensure tariffs are reviewed, the market can be relatively liquid.
He said, “If you look at section 116 sub section 2A of the electricity act, it mandates the commission to ensure that the licenses operating efficiency are allowed to recover sufficient revenue for the capital invested and for the operational cost as well as having a return on the investments they have made.
“In that case, it means that the onus is on the commission to ensure that operators actually earn sufficient revenue that we incentivize further investments in order to ensure improvement in service delivery.
“What informed the decision apart from the provision of the act, in December 2023, there was an improvement in the quality of service down to January. From then on there was a dearth in electricity availability. Lack of review of tariffs caused that.
“The Discos could not be mandated to forward what they had not been allowed to charge. For that the payment to the generation companies has significantly dipped which affected their ability to maintain their machines and to pay for gas. And gas is one of the two significant raw materials for electricity generation in Nigeria.
“At a point, it is clear that if nothing is done to ensure tariff is reviewed, the market can be relatively liquid.”
