Discos Seek Higher Electricity Tariffs amid Nigeria’s Power Woes

Ilesanmi AdekanbiJuly 14, 2023

1 minute read

The 11 power distribution companies (Discos) in Nigeria have submitted applications for the review of their electricity tariffs, according to the Nigeria Electricity Regulatory Commission (NERC).

The Discos cited changes in macroeconomic parameters across Nigeria as a basis for their request.

They also highlighted other factors affecting service quality, operations, and company sustainability as reasons for the proposed rate adjustment. According to the NERC, the application aligns with the rules stipulated in the Electricity Act 2023.

The tariff review comes amid a power crisis in Nigeria, where electricity supply is erratic and inadequate. Many Nigerians rely on generators and alternative sources of energy to meet their daily needs.

The Discos have been struggling to provide efficient and reliable service to their customers, while facing challenges such as vandalism, metering gaps, revenue losses, and regulatory uncertainties.

Recall that in June, some Discos had hinted at a possible tariff hike from July 1, 2023, which led to widespread criticism and subsequent withdrawal of the announcement.

This flip-flop triggered a rush among prepaid consumers to purchase more electricity units, anticipating an impending increase in tariffs.

On July 1, 2023, the expected tariff hike did not materialize, suggesting the Discos had not secured approval from the power sector regulator. However, the NERC announced on Thursday that the power companies had officially applied for a rate review.

In their notice, the regulator confirmed, “Pursuant to Section 116 (1) and 2(a&b) of the Electricity Act 2023 and other extant rules, the 11 successor electricity distribution companies have filed an application for rate review with the Nigerian Electricity Regulatory Commission.”

The NERC said it would consider the applications and make a decision in accordance with the law and public interest. It also invited stakeholders and the general public to submit their comments and observations on the applications within 21 days from the date of publication.

The outcome of the tariff review could have significant implications for the power sector and the economy at large. While some argue that a tariff increase is necessary to ensure cost recovery and sustainability of the Discos, others contend that it would worsen the plight of consumers and businesses who are already facing high costs of living and production.