CEM REPORT, ENERGY | The Nigerian Electricity Regulatory Commission (NERC) has sparked controversy with a recent decision to increase electricity rates for Band A customers. This category encompasses households fortunate enough to receive an average of 20 hours of daily electricity supply.
The announcement, made by NERC Vice Chairman Musliu Oseni, revealed a staggering increase – a jump from ₦66 per kilowatt-hour (kWh) to a whopping ₦225/kWh. This translates to a 230% increase in electricity costs for these consumers.
The Band System and the Hike Impact
Nigeria’s electricity distribution system categorizes consumers into different bands based on the average daily power supply they receive. Band A, with the highest tier, enjoys the most consistent supply, while Band D experiences frequent outages.
According to Oseni, roughly 15% of Nigeria’s 12 million electricity consumers fall under Band A. However, the recent review by NERC indicates a discrepancy within this category. Their evaluation suggests that only 17% of feeders (distribution lines) previously classified as Band A truly meet the 20-hour supply criteria. Consequently, these feeders now service a smaller portion of customers – under 15% of the total Band A population.
“We currently have 800 feeders that are categorised as Band A, but upon reviewing those feeders’ performance, the Commission has now reduced it to under 500. This means that 17% now qualify as Band A feeders. These feeders only service 15% of total electricity customers connected to the feeders.
NERC Justification for the Hike
The NERC explains this price increase as a necessary measure due to the financial strain on the electricity sector. The government’s failure to consistently meet subsidy obligations has created a significant debt burden for power generation companies and gas suppliers.
However, the decision has been met with widespread criticism from consumers. Many question the fairness of such a steep hike, particularly considering the ongoing challenges with power supply reliability. Nigerians already grapple with frequent blackouts, raising concerns about paying a premium for a service that may not be consistently delivered.
Metering Assurances and Impact on Other Bands
The NERC has attempted to address consumer anxieties by emphasizing a focus on meter rollout. They aim to ensure that affected customers are not subjected to overbilling, especially under the new tariff structure.
Oseni reassured citizens that the price increase is exclusive to Band A customers who genuinely receive the promised level of power supply. Consumers in Bands B, C, and D will not be impacted by this specific tariff review. The metering rate for Band A customers is reportedly at 80%, suggesting a significant portion already have meters installed.
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The Road Ahead
The NERC’s decision to hike electricity rates for Band A customers highlights the complex challenges within Nigeria’s power sector. While the move might address financial sustainability concerns, it raises questions about affordability and fairness for consumers.
The success of this strategy hinges on two key factors: consistent power supply for Band A customers and a swift rollout of meters to prevent overbilling. Ultimately, Nigerians yearn for a more reliable and equitable electricity system that balances the needs of the industry with consumer affordability.
