[size=13pt]Electricity tariff to rise by over 50%[/size]

Nigerians are to start paying between 50 and 100 per cent more for electricity as from January next year, the Chairman and Chief Executive Officer, Nigerian Electricity Regulatory Commission, Dr. Sam Amadi, has said.


Contrary to some reports on Tuesday, Amadi said the approval of the review was likely to be done in November this year after wide consultations with stakeholders.


The NERC boss, who spoke with our correspondent on the telephone on Tuesday, said that discussions were ongoing with government in this regard.


He said, “From all indications, after the review, tariff will go up by 50 to 100 per cent. The approval of the review will be done by NERC. What we are doing now is having consultations with all stakeholders, as well as discussing with government.”


The new electricity tariff being proposed in line with the ongoing reforms in the power sector will take effect from January 2012, according to Amadi.


With the planned tariff increase, those in the Residential Two category (residential customers with single-phase meters), where most customers belong, will pay between N10.85 and N14.60 per kw/h as against the current rate of N7.30 per Kw/h.


For the R3 category customers, who are currently paying N11 per Kw/h, the reviewed rate would be between N16.50 and N22.


For Residential One category (comprising the lowest-paying customers), who are now paying N2.20 per Kwh, they will be made to pay between N3.30 and N4.40.


Highest-paying customers, who now pay N15.60 per Kw/h, are to pay between N23.40 and N31.20.


He had earlier in the year said the planned tariff structure was hinged on the ability of price to play its natural role of catalysing efficient allocation of resources, thereby promoting availability, affordability and accessibility of electric power to all Nigerians.


He said that the approval would enable the commission to engage further with all stakeholders and also align the review date with the calendar of most businesses, especially those in the electricity supply industry.


He said that the commission would spare no effort in ensuring that data supplied by operators for the process were subjected to the highest level of scrutiny and verification to demonstrate fairness to all stakeholders.


The NERC boss, who had also commented on the Multi-Year Tariff Order, said it provided for a periodic review of the cost parameters through the minor annual and major five-year review windows, adding that the annual review of framework took into cognisance changes in gas price, inflation and exchange rates, while the major review considered holistic changes in major parameters.


“The review is aimed at ensuring that prices at all times reflect the prevailing economic circumstances in Nigeria. It is on record that between 2008 and now, the MYTO has undergone two minor reviews in line with the methodology,” he said.


According to him, despite these attributes of MYTO, the market has yet to become robust; it has also failed to achieve optimum efficiency and milestones as envisaged by the commission.


He said, “The much needed private sector investment, especially in the distribution sector, has not materialised. And this is likely to continue as long as the Federal Government continues to hold on to the responsibility for policy making, regulatory and operational management across the three sectors of the Nigerian Electricity Supply Industry.


“Such market imperfections as low generation capacity, low private sector participation, high and unprecedented operating costs and overheads still abound in the industry today as in 2008. Prompt payment for gas feedstock has persistently been difficult even as gas supply has improved in the last few months.”


Amadi also said that the general belief in the electricity sector was that the current MYTO prices still could not support investments therein as they were much lower than in most developing countries.

http://www.punchng.com/Articl.aspx?theartic=Art20110914132350

I'm sorry, but are we speaking of the electricity that is current NOT stable?

Or with the rise in tariff comes rise in electricity stability?

a necessary step

ShipIt:

This seems like a pathetic attempt at blackmailing the government to deregulize the power sector, I don't see how raising prices on something that doesn't work is supposed to make it work better,

Actually it is expected. The low tariff is a major reason why we have not seen lots of  private investments in the sector like we saw in the telecommunication sector. The present tariff simply doesn't make sense for private investment.

If the increased tariff will yield the desired investment in the sector and bring constant supply of electricity, then so be it.

Is this too for the benefit of common man? I doubt it.

There may be an increase but "politics" will not let it be that high.

Nigeria needs urgent cleansing. Lets be honest with ourselves, even though NEPA is phucked up, but truth remains most Nigerians don't pay light bills, even so many large companies and rich politicians don't pay. I would rather see us pay more electricity tariff and have steady light,

In my village in Imo State, we do not pay electricity tariff since many years now, the village boys keeps fighting the NEPA boys each time they show up to collect nepa bill. Our boys claim the money we used to pay do not even reach NEPA management as some few officers will just pocket the money and give their own receipts. We need total deregulation to make things work,

ziccoit:

Is this too for the benefit of common man? I doubt it.

Yes.

If you want to eliminate scarcity, PHCN has to be able to charge at a minimum what it costs to produce the electricity.

People generally don't like selling things at a loss

why should we even be paying for whats not there?

All i care abt is give us stable light. At least let me know what am paying for

why should we even be paying for whats not there?

Who say we are not going to pay? well for me i am going to pay as far as i am enjoying stable like Benin Republic if not no shishi i mean no kobo, and beside i think what the Power sector need is privatization to so many foreign investor and reformation in the power sector too like new meters for each house if you need a stable power go to the Power Holding or any power supply company close to you and reach an agreement simple and if you refuse to pay your bills your light got cut off from there office let see how area boys will beat Nepa staff then

OMG!!
So we now have electricity in Nigeria and I didnt know, where have I been?
Somebody please wake me up

No need to fool ourselves!! Too many products have been underpriced for too long in Nigeria. If you travel abroad for 1 week and witness 24hr power you'll be willing to pay for it at even N20. Funny enough, most of the people here run generators at high cost (petrol, servicing, repairs, noise pollution, inconvenience etc) but keep complaining when the govt talks about increasing the tariff.

If you have a 5Kva gen (5000Va), multiplied by a factor 0f 0.8, then it generates about 4000watts. A 5Kva gen consumes about a full 25litre gallon for about 10hrs. At N65per litre that is N1625.

Generating 4000watts for 10hrs means you are generating 40,000watt hours or 40Kwhrs which is what PHCN calls 1unit and charges N11 for.

It therefore means that your cost per Kwhr from gen is N1625/40 = N40.60 per Kwhr.

Recall also that most of that electricity is actually wasting, as it is very unlikely that anyones uses the full capacity of the gen. At most you'd be using about 60% of the 4000watts, meaning about 40% of that cost is even being wasted.

Let's use our heads and think when we criticise the rate increase.

All this does not even account for the benefits of having 24hr power such as peace of mind, better healthcare, improved sleep, better lifestyle, ability to shop in bulk and stock the freezer etc) which cannot be easily quantified in naira and kobo.

Of course that is not to say that the rate increase alone will bring about 24hr electricity, but the point i'm making is that eventually when the sector is deregulated, tarrifs may get to the N20 region as new inverstors invest heavily in the necessary infrastructure to significanlt improve power supply, and that it is still likely to be cheaper that generator power.

I would expect the model for govt to ensure the private sector adopt is a tiered system where the rich subsidise the poor. Eg the first 50units purchase every month might be N10, while the next 250 might be N18. My average is about 300-350 units amonth and i use ac's, microwave, water heater, deep fryer etc. The poor people who don't use all these things should be able to consume less than 100 units amonth so at least buying the first 50 units at a cheaper rate helps. while those who use alot pay more than the actual cost to help pay for the poor who are being charged less than cost price or at least exactly the cost price,

Ficticious billings!
Meter that is not read, yet bills come in. Where do dy get d outrageous billings 4m.
If things are done aright: regular supply, metre reading (non card users), accurate billings, I think most pple wont even complain.

follow nigerian,i think price increase in elecricity tariff under this corrupt environment is completely meaningless.if there must be a tariff increase,let the foreign investors do it.

They just effect an increase 2 months back yet they are talking about another increase again,why?

quote femi song
' water light food job oooooo yei kparipa yei'

i want the NERC to consider so many things before energy tarrif is increased. firstly the government should try to solve the problem of some of the houses without METER reading. secondly, VAT and the meter maintenance fees should also be considered, The light should be stable 24hrs without interruption,if all these are in places NERC can go ahead and do whatever they like,

As already mentioned - People are already paying a much more higher cost for electricity via a generator - so If the Higher cost will increase electricity i think it is viable way forward.

There is nothing bad or wrong in supporting good policy but wait a bit. The man kept talking about kwh or unit increase, but he didn't say anything about fraudulent charge on Meter maintenance. May be you didn't know that they maintain any meter, yet the charges increase the same rate that unit charge increases. What about VAT too? Even the charges increase by 300%, we still won't get any improvement in return. Corruption is still there.

COMPAQ:

No need to fool ourselves!! Too many products have been underpriced for too long in Nigeria. If you travel abroad for 1 week and witness 24hr power you'll be willing to pay for it at even N20. Funny enough, most of the people here run generators at high cost (petrol, servicing, repairs, noise pollution, inconvenience etc) but keep complaining when the govt talks about increasing the tariff.

If you have a 5Kva gen (5000Va), multiplied by a factor 0f 0.8, then it generates about 4000watts. A 5Kva gen consumes about a full 25litre gallon for about 10hrs. At N65per litre that is N1625.

Generating 4000watts for 10hrs means you are generating 40,000watt hours or 40Kwhrs which is what PHCN calls 1unit and charges N11 for.

It therefore means that your cost per Kwhr from gen is N1625/40 = N40.60 per Kwhr.

Recall also that most of that electricity is actually wasting, as it is very unlikely that anyones uses the full capacity of the gen. At most you'd be using about 60% of the 4000watts, meaning about 40% of that cost is even being wasted.

Let's use our heads and think when we criticise the rate increase.

All this does not even account for the benefits of having 24hr power such as peace of mind, better healthcare, improved sleep, better lifestyle, ability to shop in bulk and stock the freezer etc) which cannot be easily quantified in naira and kobo.

You have spoken well,

If power supply were stable then nothing wrong with me paying 50% more when i am sure i would almost never need to buy diesel to power my generator.
I do say we get Minimum of 20hr Supply everyday before they can talk of increase tariff.

^^^
Chicken or egg, which came first?

You wont pay more because it's not readily available, it's not readily available because you wont pay more. Who blinks first.

Personally, I think they should just fix the price at the optimum rate, 50, 100, 0r 150 percent extra and get over with it already.
Nigerians paid heavily (still paying) for telecommunication, how much more power!

How does increasing tariff help sort out the light situation in Nigeria when the infrastructure to deliver steady power supply does not exist. Someone mentioned telecoms, if I remember clearly it was even more expensive when we only had 090, so what is the rationale.

I say bring in companies to deliver and generate power supply and let them through market forces set the price and see if people would not pay when they have 24x7 light.

If the proper infrastructure is in place, e.g e-meters, when you don't pay your bills you don't get electricity. That automatically deals with people who refuse to pay their bills and officials who take payments and issue fake receipts. Increasing tariff without the product would only lead to more chaos.

The new tariff is already implemented, my bill this month shows a 50% increment even for an unavailable service.

@ Topic

Even this tariff increase is still not enough to attract private investment in the power sector. The people best placed to set tariff are private power companies based on their cost to generate and distribute this power. The government will never set a cost reflective tariff due to political backlash.

Private firms will set cost reflective tariffs as they are not charities. It is when PHCN successor companies have been privatized that we will really know real prices to pay. The NERC is putting the cart before the horse by setting prices now when the companies are still being run by the government.

When our power sector is being run by private firms; losses and theft, poor billing, bribery will reduce or disappear. The above named ills used to happen when Nitel ran the telecom sector and has virtually disappeared under private telcos. You pay upfront for what you use.

No one has asked the crucial question?

What is the need for tariff increase?