The federal government on Tuesday announced a 50 per cent reduction in the electricity tariffs to be paid by Nigerians.
The immediate review of electricity tariff by half was announced by the Nigerian Electricity Regulatory Commission, NERC, in Abuja.
Chairman of the Commission, Sam Amadi, disclosed that the downward review, which takes effect from the end of March, followed the regulatory agency’s decision to remove collection losses from customer tariff under the multi-year tariff order.
He stated that the Commission had received a litany of complaints and petitions against the approval of the multi-year tariff order, MYTO 2.1 in January 1, 2015. He pointed out that this resulted in astronomical increases in tariff across the various consumer categories.
Amadi particularly referred to the petition by industrial and commercial consumers under the aegis of the Manufacturers Association of Nigeria, which demanded a drastic reduction of their tariffs. This was as they cited the negative impact of their increased tariffs that was threatening their businesses, leading to massive job losses.
Amadi continued that the Commission reviewed the petitions and conducted public hearings to gather evidence from all consumer classes on the affordability of the new tariff.
He further stated that the NERC had consulted with the Chief Executive Officers of the Distribution Companies before deciding to intervene by reviewing the tariffs.
He went on to state that the reviews were in accordance with provisions of the Electricity Power Sector Reform Act 2005 and the Business Rules of the Commission’s mandate, which allow such a decision on a petition by an interested party within 60 days.
He said findings from the various reviews showed that the major cause of the spiraling consumer tariffs was the huge aggregate technical commercial and collection losses.
Some distribution companies had complained that the collection losses, which were passed to consumers, raised the final tariffs by as much as an average of 80 and 103 per cent.
“The Commission has been listening to consumers’ complaints and taking full account of the impact of the high tariff on consumers and the Nigerian economy,” the Chairman stated.
In line with the foregoing, Amadi said, “the Commission has reviewed the basis of the MYTO 2.1 assumptions and has determined that it is inappropriate to transfer to consumers collection losses that are controllable by the DISCOs (distribution companies)”.
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