FG Reduces Electricity Tariff By 50 Percent
After a thorough review of the huge electricity tariffs being paid by its citizens, the Federal Government has on Tuesday, March 17, 2015 announced the reduction of the tariff by 50 percent.
The reduction which takes effect by the end of March was communicated through the chairman of the Nigerian Electricity Regulatory Commission, Sam Amadi, who made the announcement in Abuja.
He said the commission agreed to remove the Multi-year tariff order, MYTO 2.1 following multiple petitions and complains from Nigerians especially members of the Manufacturers Association of Nigeria who said inclusion of the MYTO 2.1 caused them to spend more on their businesses and in some cases loss of jobs.
“The Commission also invited the Chief executive Officers of the distribution companies to the hearing to respond to the case of the consumer groups. Furthermore, the Commission reviewed the technical and financial assumption of MYTO 2.1.”The review shows that the major underlying cause of the skyrocketing increase in the tariff is the huge Aggregate Technical, Commercial and Collection (ATC&C) losses, which are passed through to consumers. In some DISCOs ATC&C losses increased tariff by as much as 80-103%.”It is the responsibility of the DISCOs to collect their revenue from their customers. Failure to do so should not be a penalty to customers who pay their bills. It is clear that removing the collection losses will lead to lower tariffs for consumers.
“The removal of collection losses from customer tariff has reduced tariff by more than 50 percent in some places. Please note that the reduction does not affect the CBN facility and its repayment.
“Therefore, On Monday, March 9, 2015 the Nigerian Electricity Regulatory Commission (NERC) issued a new order to the effect that henceforth collection loss, which is defined as the ‘amount billed but not collected’, will not be automatically passed on to consumers of electricity.
“Consequently, the collection loss for all DISCOs is set at zero. It is now the responsibility of DISCOs to convince the regulator of any exceptional circumstances for such loss to be passed to the consumers.”