Energy

Buhari approves electricity tariff increase, fixes new date for implementation

Published

6 years ago

August 26, 2020

President Muhammadu Buhari has approved the much-anticipated electricity tariff increase effective from September 1st, 2020.

Recall that the Nigerian Electricity Regulatory Commission (NERC) had approved service reflected tariffs for the electricity sector and was due to commence July 1, 2020 after it was initially postponed from April 1, 2020. However, this was suspended after reports indicated Electricity Distribution Companies, DisCos, had pushed for a postponement until key areas of disagreement are sorted.

According to a reliable source, the president may have finally approved the official implementation of cost-reflective tariffs for the Nigerian Electricity Supply Industry (NESI),” with the tariff now set to go live on September 1, 2020.

Just a few months ago, the National Assembly promised tariffs will not increase until the first quarter of 2021 following several deliberations it held with stakeholders.

In the course of the meeting, the DISCOs too admitted that they were not well prepared for the planned hike in tariffs even though they so much desired the increase. The meeting agreed to defer the planned hike till the first quarter of next year while the leadership of the National Assembly promised to meet with President Muhammadu Buhari on the issue.

It is unclear whether the National Assembly will once again wade into this matter.

Nigeria applied for a $3 billion World Bank loan from which $1.5 billion and another $1-$1.5 billion loan is for State Governments. However, as reported earlier, the World Bank expects Nigeria to meet certain preconditions before the loan is disbursed. Some of the conditions we gather include;

The World Bank is also reported to have earmarked $750 million for the Power Sector and reportedly will not disburse the loans if the power sector is not operating a cost-reflective tariff regime. However, it appears DisCos had some issues to clarify with stakeholders such as the Regulators before a new tariff can be approved.