Electricity bills have soared by 58% after the Federal Government withdrew a N500 billion annual subsidy to the power sector, according to latest findings.
The findings was revealed via a report issued by The PUNCH, on Thursday, June 2, which noted that the power subsidy was phased out in 2020, prompting the Nigerian Electricity Regulatory Commission (NERC) to raise charges from N31/kWh to N49/kWh beginning last year.
Association of Nigerian Electricity Distributors’ latest report, titled ‘Analysis of the Commercial KPIs for ANED’s Members/2021,’ stated that with the effective implementation of the Service Based Tariff in November 2020, the Federal Government removed electricity subsidies worth over N500 billion and “allowed tariff increase from 31 N/kWh to 49 N/kWh in 12 months.”
Hence, electricity tariffs have increased by N18/kWh since the subsidy removal.
ANED said the new electricity tariffs “for better service” were for customer categories under the class A, B and C.
The report added;
This fact, together with the DisCos ́ ATC&C losses recovery in 2021, disproves the paradigm that an increase in tariffs leads to an increase in losses.
Although the DisCos and NERC have continually denied tariff increases, the findings back up Minister of Finance, Budgets and National Planning Zainab Ahmed’s remark in March that the FG has abolished all power sector subsidies.
Consumers with prepaid meters have also expressed dissatisfaction with the drop in electrical units received from DisCos. Customers were sent migration links early this year by the DisCos.
The DisCos sent to an online form to consumers where they entered their meter numbers and other information to migrate from the old tariff plans to the new tariff plans after clicking the application link.
However, an examination of the association’s graphical representation of tariff movement revealed that, while the Nigerian Electricity Supply Industry’s (NESI) cost of service increased from N1.15 trillion in 2019 to N1.8 trillion in 2021 (and weighted generation cost increased from N23/kWh in 2019 to N27/kWh), NESI’s cost-reflective tariff in 2021 was 5 N/kWh less than in 2019.
It truly does not make any sense that, while the generation cost and other costs continues to grow at NESI, the cost-reflective tariff is systematically and artificially reduced.
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.