The Association of Nigerian Electricity Distributors (ANED) said the removal of N500 billion yearly electricity subsidies by the federal government translated to a 58 per cent hike in tariff.
ANED in a recent document, said electricity tariff rose from N31/KWh in 2020 to N49/KWh presently, an increase of N18/KWh.
Although the DisCos and NERC have consistently denied tariff increment, findings corroborated a statement by the Minister of Finance, Budgets and National Planning, Zanaib Ahmed in March that FG had removed all subsidies in the power sector.
Electricity consumers with prepaid metres have also lamented reduction in electricity units received from DisCos. The DisCos had, earlier in the year, sent out migration links to customers. Once clicked, the application link took customers to an online form where meter numbers and other information were inputted to migrate from the old tariffs to the increased tariff plans.
However, an observation of the graphical representation of tariff movement presented by the association showed that while the Nigerian Electricity Supply Industry, NESI’s cost of the service had grown from N1.15trn in 2019 up to N1.8trn in 2021 (and weighted generation cost has gone up from N23/kWh in 2019 to N27/kWh), NESI’s cost-reflective tariff in 2021 was 5 N/kWh cheaper than in 2019.
The ANED said “It truly does not make any sense that, while the generation cost and other costs continue to grow at NESI, the cost-reflective tariff is systematically and artificially reduced.”
It, however, said despite the increment in the generation, transmission and administrative costs, the cost-reflective tariff had been decreased mainly due to a continuous reduction in the regulated ATC&C losses under the Multi Year Tariff Order.
The DisCos had, for several years, clamoured for cost-reflective tariffs.
“DisCos are not being able to recover NESI ́s cost of service as the real ATC&C losses are much higher than that under MYTO. This fact is exacerbating DisCos liquidity crisis and cash stress, weakening DisCos’ balance sheets and preventing access to funding, ultimately, impeding DisCo performance improvement. Thus, it raises the question of whether there can be future DisCo improvement if the situation currently precludes any major investment in NESI?, ANED said.
The federal government had, some time ago, mopped up customers tariff debts to the DisCos.
