FG Approves New Electricity Tariffs

3D Electric powerlines over sunrise

The Federal Government has authorized the collection of Service-Based electricity tariffs (SBT) from next week. The approval was given after sealing a deal with the organized labour yesterday.

Earlier in September, the government suspended the new electricity tariff regime implementation due to the threat of industrial unrest by the Nigeria Labor Congress and its associates.

However, the Federal Government and organized labour have come to a decision as both parties agreed that the tariffs for some sections of power consumers should be revised and minimized.

This has led to a reduction in customer tariffs. Tariffs for customer A and B have been reduced by 10 percent, while the tariff for C band customers was reduced by 30 percent. Customer D and E band tariffs remain frozen suggesting no increase.

Mr. Ahmad Zakari, the Special Adviser on Infrastructure to President Muhammadu Buhari, attested to the new development yesterday at the 51st virtual Power Dialogue organized by Nigeria Electricity Hub in Abuja. He stated that the subsequent approval of the new term by the labor congress has brought about the implementation from next week.

The Special Adviser disclosed that the electricity market in the country will collapse if the government permits it to continue in the way it has always been administered.

Zakari further stated that henceforth there will be more transparency in the collection of electricity revenues by the Distribution Companies (Discos) considering that it is presently being supervised by the government.

He added that Value Added Tax (VAT) and other deductions will now be removed from the funds before the rest will be remitted to the Discos,

‘Remember that 55 percent of on-grid consumers are still 100 percent subsidized. The N3 on average per kilowatt per hour for band D and E were paying before SBT, they will continue to pay. Only 45 percent of the on-grid population was affected. And with the agreement with labor, we are now going on to take out an additional 30 percent from band C in terms of what they were supposed to pay.

‘That increase will be reduced by 30 percent and then there will be a 10 percent reduction in A and B. But I promise you next week on the headlines if we resume service based tariff, what everyone will be saying is that the government has increased tariff for everybody and that’s because there’s a vibrant urban population that consumes the headlines. But we are committed to doing the right thing.’

‘Hard decisions are not always popular. But we are going back to SBT with the reduction agreement that we have with labor and we are going to make this market work.’

When questioned if he should be quoted on the next week resumption of SBT since it was disclosed in the public, Zakari stated,

‘That government/labor agreement was two weeks ago, but the government actually had refused to implement it because it wanted to provide additional palliatives at this difficult time. You can quote me that this was supposed to have taken off two weeks ago.’

He revealed that the government had wrongly made some decisions which had impeded growth, but also noted that at the moment, tough decisions to enable the survival of the industry and supply of stable electricity to Nigerians will be appropriated.

Following this, Mr. Lawal Lawal, the Chief Compliance Officer, Kaduna Disco, remarked that metering constituted half of the problems in the industry, adding that if it is solved, other things will fall in place.

He said: ‘Metering is nothing short of 50 percent of the problem. It doesn’t just give you more funds it also ensures that you have more data to work with to make informed decisions with.’

‘It’s unfortunate that a lot of focus has gone to other areas, but with the benefit of hindsight, if I was to look at the single biggest problem, I would focus on metering because if we are able to close the gap between the collection, the distributor and the transmitter will go all out to ensure that they get people to build more megawatts and get people to build more plants. That’s the next logical thing.’

He also revealed that in the last five years. Discos had been giving enumeration and the enumerated number had been reduced due to finding more customers.

‘It used to be somewhere around five million around 2015/2016 and then went to seven million and last year when MAP started, it was about nine million. But now, the data as at July which we submitted to government is somewhere around 11.2 million,’ he averred.

Peace Omenka

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