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FG Hikes Electricity Tariff

The federal government has increased electricity tariff payable by consumers across the country.

The approval for the hike was given by the Nigerian Electricity Regulatory Commission(NERC) in a directive issued on December 31.

According to the directive issued by the commission and signed by its chairman, Sanusi Garba,  the increment is due to the current economic realities especially  inflation and exchange rate, US inflatio

“This order supersedes ORDER/NERC/ 202B/2020 and shall take effect from January 1, 2021, and shall cease to have effect on the issuance of a new minor review order or an extraordinary tariff review order by the Nigerian Electricity Regulatory Commission (“NERC” or the “commission”),” the commission said.

“The actual average monthly inflation rate of 13.1% for the period January to November 2020 was used for review of the year 2020 tariffs, while, the November 2020 inflation rate of 14.9% as obtained from the NBS was adopted to project Nigerian inflation rates for the year 2021 and beyond.

“In line with the MYTO Methodology, the CBN official exchange rates plus a premium of 1% were used for the retroactive review of the year 2020. Accordingly, average NGN/USD exchange rate (+1%) for the period 1st January 2020 to December 15, 2020, of N360.8 was used to review the year 2020 tariffs. The NAFEX closing NGN/USD exchange rate (+1%) of N397.44 as at December 29, 2020, was adopted to project NGN/USD exchange rate for 2021 and beyond.

“The year 2020 projection on available generation is maintained for the first half (Jan-Jun) of 2021 to account for the impact of the delay in the implementation of MYTO-2020. No change was applied to generation projections from July 2021 and beyond.

“A benchmark gas price of $2.50/MMBTU, gas transportation cost of $0.80/MMBTU and gas prices outside the regulated rates for GenCos with effective gas sale agreements (“GSAs”) were maintained.”

In November 2020, the electricity distribution companies (DisCos) began implementation of a service-based reflective tariff (SRT) structure nationwide after receiving approval from President Muhammadu Buhari.

The  new tariff will take effect from January 1.

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