The recent hike in electricity tariffs by the Nigeria Electricity Regulation Commission (NERC) has sparked various reactions and strategic moves within the power sector. Vanguard reports that electricity distribution companies (DisCos) are adjusting their feeder coverage to comply with the new tariff structure, aligning the number of Band A customers with NERC’s approved coverage area.
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Initially, DisCos had recorded 1,100 feeder coverage areas for Band A customers, but NERC stated that the actual coverage area for the new tariff is only 480. As a result, DisCos are working to increase the number of Band A consumers to ensure compliance with the revised tariff.
The tariff hike, which saw a 230% increase for Band A customers, is expected to reduce subsidy costs by N137.1 billion per month. Despite the strengthening of the Naira, NERC pegged the forex rate at N1,463.3/$, aiming to align tariffs with inflation and foreign exchange rates.
However, concerns have been raised by consumer advocates and industry stakeholders regarding the broader implications of the tariff adjustment. The Manufacturers Association of Nigeria (MAN) stated that the tariff hike does not seem to apply to heavy users like manufacturers, but consultations are ongoing for clarity.
Energy experts and economists have weighed in on the tariff adjustment, emphasizing the need for sector liquidity and sustainability. They highlighted the challenges faced by DisCos, with many operating at a loss, and expressed hope that the tariff hike would address liquidity issues and improve overall service delivery.
While some experts see the tariff adjustment as a step towards market efficiency, others caution against potential negative impacts on consumers and the broader economy. The NERC’s decision reflects ongoing efforts to balance the need for sector viability with consumer affordability and regulatory transparency.
