Tariff Hike Sparks Discrepancy: DisCos Returning Consumers to Band A

In the aftermath of a notable disparity between the number of feeders classified as Band A customers by electricity distribution companies (DisCos) and the figures endorsed by the Nigeria Electricity Regulation Commission (NERC), DisCos are now taking steps to readjust consumer categorizations to Band A to apply the new tariff.

It was learned that DisCos had reported 1,100 feeder coverage areas for Band A, whereas NERC stipulated the actual coverage area for the new tariff as only 480.

According to a source within one of the DisCos in Lagos, efforts are underway to increase the number of Band A consumers, reinstating those previously reclassified by NERC.

Recall that on Tuesday, NERC escalated the electricity tariff for Band A customers by 230 percent, from N68 per kilowatt-hour to N225/kWh.

Band A customers constitute those receiving an average daily supply of electricity for 20 hours or more. With the new order from NERC, Band A consumers will no longer benefit from Federal Government subsidies on electricity.

In the interim, the new tariff structure is projected to trim subsidy costs by N137.1 billion monthly, following the decision to hike tariffs for approximately two million consumers by 230 percent.

With the tariff freeze in place, monthly subsidies payable by the government had escalated to N241.66 billion, but NERC’s April Supplementary Tariff Order disclosed a reduction, now pegged at N104.6 billion monthly.

Scrutiny of the directives issued to the 11 electricity companies revealed that the government’s highest monthly subsidy payments would be to the Abuja Electricity Distribution Company (AEDC) servicing four states (Niger, Kogi, Nasarawa, and the Federal Capital Territory), amounting to N18.95 billion.

Further breakdown indicated monthly subsidy payments to other DisCos as follows: Ikeja Electric (N17.03bn), Jos DisCo (N9.19bn), Kaduna DisCo (N9.76bn), Ibadan DisCo (N11.16bn), Enugu DisCo (N10.31bn), Benin DisCo (N11.01bn), Yola DisCo (N6.86bn), Port Harcourt DisCo (N10.12bn), Kano DisCo (N7.79bn), and Eko DisCo (N13.74bn).

In response, energy expert Prof. Yemi Oke criticized the continuous injection of funds into power companies, highlighting the sector’s liquidity boost and the precarious financial state of DisCos.

On the consumer end, President of Nigeria Consumer Protection Network, Mr. Kunle Olubiyo, cautioned that DisCos might exploit the tariff hike to implement broader tariff increases across all consumer bands.

Prof. Wumi Iledare, Professor of Petroleum Economics and Policy Research, emphasized the necessity of adjusting the tariff structure based on market dynamics, acknowledging the complexities involved in tariff calibration.

Meanwhile, the Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, indicated that the tariff hike might not directly affect heavy users like manufacturers but stressed ongoing consultations for clarity.