Electricity tariff ‘ll go up Dec 1, says NERC 

Electricity tariff ‘ll go up Dec 1, says NERC
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In spite of the erratic power supply situation in the country, the Nigerian Electricity Regulatory Commission (NERC) yesterday said it will increase electricity tariff with effect from December 1 this year.

It blamed data collected from the Central Bank of Nigeria (CBN) and the National Beurea of Statistics (NBS) which showed inflation rate, gas price and falling exchange rate for the inevitability of its decision.

NERC said throughout the period from December 1 this year to May, 31 next year, the retail tariff will be based on the generation of 3,676megawatts (Mw) of electricity.

Its Tariff and Rates chief, Roland Achor, who spoke in Abuja at a meeting with Electricity Industry Stakeholders on the Bi-Annual Minor Review of Multi Year Tariff Order (MYTO-2), said tariff increase has become imperative in view of the prevailing circumstances.

He said: “So the last available deduction capacity that we used was 3,424Mw, throughout the period from Dec 1 to May 31, 2015 retail tariff will be based on the generation of 3,675Mw. That is what we are going to use to come out with the new tariff.

“The effective foreign exchange to $1 is N156.29k. Recently, the commission with BPE (Bureau of Public Enterprises) in collaboration with the Ministry of Petroleum Resources have agreed on a new bench mark commencing Dec 1 and the new price is $2.50 and a transportation cost of 80 cent effective Dec 1.

“The exchange rate takes care of foreign exchange risks in the power sector. The equipment required are always foreign denominated, so we allow the foreign exchange rates to take care of the risks. From the data we received from CBN, it shows that the foreign exchange rate as at Sep. 2014 is N154.75 to $1 while the exchange rate as at last year was N158.57 and if you look at our model, we bench marked it at N178 to $1.”

According to him, it is important to note that the commission allowed one per cent above the CBN rate to cover for letters of credit and other bank charges. He said, currently, if the one per cent which is the premium is added, the new foreign exchange rate to $1 is N156.29 commencing Dec 1, 2015.

He said: “It should be noted that the minor review we did in May was at $1.8 for both pricing and transportation. “Before 2012, there where only three standard tripod that was used for the manual review which was inflation, exchange rate and gas price.

“It was projected that by 2008 we were supposed to generate 4000Mw, in 2009, 6000Mw, 2010, 1000Mw and 2011 16,000Mw it was gathered that all of these projections ended in fiasco.

“Based on information we got from the system operations department, it shows that on a six months average ending Sep 30, 2015, the total division (sic) capacity was 3,675.41 Mw, the gross capacity estimated was to be 5,556 Mw.

“The inflation rate compensate for the rising cost of doing business, it equally allows investors pay their staff living wages.