Nigerian Electricity Distribution Companies (DisCos) announced an upward review of electricity tariffs for Band A customers. This increase, effective July 1st, 2024, translates to a rise from N206.80 per kilowatt-hour (kWh) to N209.50 per kWh. Notably, tariffs for Bands B, C, D, and E remain unchanged.
The DisCos attributed the adjustment to a revision of the 2024 Multi-Year Tariff Order (MYTO) for Band A customers. This move has sparked mixed reactions, with some Nigerians expressing concerns about affordability, particularly amidst rising inflation.
DisCos Justify Hike with Improved Service Delivery
In separate statements, DisCos defended the tariff increase, emphasizing its necessity for improved service delivery. Ikeja Electricity (IE) stated that the hike would “further sustain the improved service delivery across all bands.” Similarly, Ibadan Electricity Distribution Company (IBEDC) claimed the review was “duly approved by the Nigerian Electricity Regulatory Commission (NERC)” and would enhance service delivery.
Related: Ikeja Electric Slashes Rates for Band A Customers, Expands Coverage
NERC’s Role in Electricity Tariff Regulation
It’s important to note that the Nigerian Electricity Regulatory Commission (NERC) plays a critical role in setting electricity tariffs. In April 2024, NERC had already authorized an upward review of tariffs, impacting only 15% of consumers, primarily those in Band A. This latest move by DisCos seems to be an implementation of NERC’s earlier decision.
Potential Impact of the Tariff Hike
The immediate impact of the tariff increase will be felt by Band A customers, who will pay slightly more for electricity consumption. The long-term impact, however, remains to be seen. DisCos’ assurances of improved service delivery will be closely monitored. If service quality doesn’t demonstrably improve, Nigerians might face a situation of paying more for the same level of unreliable electricity.
Concerns and Public Reaction
The tariff hike has generated concerns, particularly among low-income earners who may struggle to afford the increased cost. The Nigeria Labour Congress (NLC) had previously opposed the earlier tariff increase authorized by NERC, highlighting affordability issues. It’s likely that the NLC and other consumer rights groups will continue to voice their concerns regarding this latest development.
If You Ask Me
Nigerians have long grappled with inconsistent electricity supply, despite significant investments in the power sector. The government, seeking to improve service delivery, has implemented a series of reforms, including the privatization of the power distribution sector. However, affordability remains a key challenge.
The recent electricity tariff hike for Band A customers in Nigeria highlights the ongoing challenge of balancing investment in the power sector with affordability for consumers. While the DisCos promise improved service delivery, Nigerians remain concerned about the impact on their finances. Finding sustainable solutions that address both investment needs and affordability is crucial for the future of Nigeria’s power sector.
The NERC and the DisCos face a delicate balancing act. They need to ensure a sustainable electricity sector that attracts investment to improve service delivery. However, they must also consider the affordability of electricity for Nigerians, especially low-income earners.
