planned Electricity Tariff Increase
Several Distribution Companies (Discos) operating in the Nigerian Electricity Supply Industry (NESI) have notified their customers of an upcoming electricity tariff increase, scheduled to take effect from July 1, 2023. The increase is attributed to the review of the Multi-Year Tariff Order (MYTO) by the Nigerian Electricity Regulatory Commission (NERC). The MYTO framework ensures that electricity prices are fair to customers while providing sufficient funds for licensees to finance their operations and maintain efficiency.
Impact of Currency Fluctuations
The Discos have cited the fluctuation of the local currency, the naira, in comparison to the dollar as a significant factor behind the tariff adjustment. The recent decision by the Central Bank of Nigeria (CBN) to harmonize the official and parallel market exchange rates has led to a devaluation of the naira, with the exchange rate reaching as high as N750 to the dollar. This depreciation has influenced the MYTO review, subsequently affecting the electricity tariffs.
Concerns and Preparations for Customers
The announcement has raised concerns among consumers, as they anticipate the impact of the tariff increase on their monthly bills. The Discos have advised customers to consider purchasing bulk energy units before the end of June to benefit from the current rates and potentially save costs. Prepaid meter users are particularly encouraged to take advantage of this opportunity. Customers on post-paid billing can expect a significant increment in their bills starting from August. The impending tariff adjustment has drawn attention from the Nigeria Labour Congress (NLC), which has expressed reservations about the proposed increase and its potential implications for Nigerians’ ability to afford electricity services.
As Nigerian electricity consumers brace themselves for the forthcoming tariff increase, the Discos’ notification sheds light on the underlying factors contributing to the adjustment. The impact of currency fluctuations on electricity tariffs emphasizes the interconnectedness of economic factors and the energy sector. The concerns raised by labor unions reflect the importance of balancing the affordability of essential services with the financial sustainability of industry stakeholders.