Nigerian Electricity Distribution Companies (Discos) have notified their customers about an upcoming electricity tariff increase scheduled to take effect from July 1, 2023. The Multi-Year Tariff Order (MYTO), a mechanism developed by the Nigerian Electricity Regulatory Commission (NERC) years ago, serves as the basis for the expected price hike. The MYTO framework aims to ensure that the prices charged by licensees are fair to customers while allowing the licensees to finance their operations and generate reasonable earnings.
According to the MYTO methodology, electricity prices in Nigeria follow a 15-year tariff path with periodic minor and major reviews. The minor reviews occur annually to account for changes in parameters like inflation and gas prices, while the major reviews take place every five years and involve comprehensive assessments of all relevant inputs in consultation with stakeholders.
The Discos, including the Abuja Electricity Distribution Company (AEDC), Ikeja Electricity Distribution Company (IKEDC), and Eko Electricity Distribution Company, have informed their respective customers about the tariff increase. They attribute the revision to the fluctuating exchange rate between the Nigerian naira and the United States dollar. The Central Bank of Nigeria (CBN) recently collapsed the official and parallel market prices, leading to a decline in the value of the naira, which now stands at around N750 to the dollar.
Customers receiving electricity supply within Bands B and C, with daily supply hours ranging from 12 to 16, can expect a new base tariff of N100 per kilowatt-hour (kWh). However, Bands A and B, which enjoy longer supply hours of 20 hours and above and 16 to 20 hours, respectively, will experience relatively higher tariffs.
The Discos have advised customers with prepaid meters to consider purchasing bulk energy units before the end of June to take advantage of the current rates and potentially save costs before the new tariffs come into effect. For customers on post-paid (estimated) billing, a significant increase in monthly billing is expected, starting from August.
The Discos have encouraged customers to contact their respective customer support teams for any further inquiries or assistance.
The proposed tariff increase has raised concerns among Nigerians. The Nigeria Labour Congress (NLC) recently voiced opposition to the planned hike, with NLC President Joe Ajaero stating that such a substantial rise would negatively impact the Nigerian populace. Ajaero emphasized that the issue of capacity to pay and quality of service delivery should take precedence over market logic and rationalizations.
As the scheduled tariff increase draws near, customers are advised to prepare for the higher electricity costs and explore energy-saving measures to mitigate the impact on their monthly expenses.
