Why we Increased Electricity Tariff – NERC

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The Vice President of the Nigeria Electricity Regulatory Commission (NERC), Musiliu Oseni has clarified the reasoning behind the recent increase in electricity tariffs for Band A customers.

The increase, which was announced by NERC earlier on Wednesday, will require customers to pay ₦225 per kilowatt-hour, a significant increase from the previous rate of ₦66.

Speaking with journalists, Mr. Oseni elaborated that the Commission is obligated by its Act to make sure that licensed entities function efficiently, enabling them to generate enough revenue to cover capital investments, operational costs, and deliver returns on their investments.

Oseni explained that the decision was influenced not only by the Act's position but also by the improvement in service quality from December 2023 to January, followed by a decrease in generation availability from January onwards.

Noting that the absence of tariff review is the cause, it is not feasible to mandate DisCos to pay for services they are not permitted to charge for. Consequently, payments to generation companies have significantly decreased, affecting their maintenance of equipment and ability to pay for gas.

And if they are unable to pay for gas, they will not be able to generate income, despite also needing money to maintain their machines.

“So, we are at a point where it is clear that if nothing is done to ensure that tariff is reviewed so that the market can be relatively liquid, the quality of supply won’t improve.”

Further clarification from Oseni revealed that the tariff adjustment specifically affects Band A customers, who have access to about 20 hours of electricity per day.

He pointed out that before the tariff revision, the Band A category had been reduced from over 1000 feeders to 481 feeders out of a total of 3000.

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