By Etuka Sunday.
With the recent electricity tariff review by the Nigerian Electricity Regulatory Commission (NERC), operators are now under strict market obligations for obvious improvement.
According to the Commission’s Chairman, Dr. Sam Amadi said, “It is expected that the take-off of MYTO 2.1 will bring about improved service delivery as distribution companies are now expected to implement their investment plans for metering and strengthen their networks in line with their bid documents.”
He explained that the adjustment in methodology is not expected to bring about any increase in tariff to the residential customers on R1 and R2, who formed majority of electricity consumers, at least not in the next six months.
“The new tariff that was signed yesterday was a review of the MYTO to factor the losses that are now different, and the new price of gas which is usually part of the minor review done every six months.”
NERC said the review had raised the cost of distributing power supply nationwide by the 11 electricity Distribution companies (Discos) and that tariff was expected to increase for all electricity consumers.
“But because of the commitment that NERC has to ensure that consumers are not further disposed to increased cost until there are improvements in supply which we expect shortly, we have frozen the increment for six months for Residential consumers (R2). It is a bitter pill for the discos but they have come to accept it.
“We approved an amendment to the MYTO tariff basically which means a new tariff order that continues with the existing framework but now shows a different figure for the remaining for the five year tariff structure,” he explained.
He noted that apart from Residential consumers, “They (Discos) are going to administer the reviewed tariff to other classes of consumers such as Commercial and Industrial consumers, but R2 consumers have special dispensation for the six months.”
Explaining the rationale behind the adjustment, Amadi said that the Commission had shielded ordinary Nigerians from possibility of rates shock that could have accompanied the review while pressing the operators for improved service delivery and to abide by the agreement they signed into while acquiring the electricity entities.
He explained further that the review was imperative on account of possible the take off date of January 1, 2015 for the transition electricity market and the memorandum of understanding between the Central Bank of Nigeria (CBN) and the Nigerian Electricity Supply Industry (NESI).
According to him, all these measures were being put in place to ensure the new owners can fund their operations and ensure improved electricity supply to the economy as well as expand the amount of electricity available for economic development.
With this development the existing regime of Interim Rules, whereby the Commission govern the market without the full rigours of the MYTO, as situation arises will cease, while activities of the market will now be governed by strict contractual obligations.
