We Need Higher Electricity Tariff to Boost Power Sector Investments – Amadi

Chairman-Nigerian-Electricity-Regulatory-Commission-NERC-Dr.-Sam-Amadi-360x225

The Chairman, Nigeria Electricity Regulatory Commission (NERC), Mr Sam Amadi, said new electricity tariff in the country would boost investment in the sector. Amadi stated this in Abuja on Wednesday at a public consultation on the commission’s “Draft Regulations on Rate Review and Investment in Electricity Networks”.

He explained that new regulations on procedure for tariff reviews in the nation’s power industry would cover the “major, minor and extraordinary review of tariff.” “These regulations will ensure the delivery of capacity at levels already projected in the revenue requirements for the sector for the price control period of 2012-2017,” he said. He stated that licensees in the industry were concerned about running profitable ventures and being able to expand their services. “So, what happens to them when the cost of doing business changes is important,” he said, adding, that what NERC had done was to set up a clear process for review of tariffs to assure investors of their investments.

Amadi clarified that the new regulations would have provisions for tariff concession to individuals and communities that had made investment by buying transformers or other equipment in their neighbourhoods. Making a presentation on the proposed tariff regime, the Head, Tariff and Rates of NERC, Dr Haliru Dikko, said notice of commencement of the review would be sent to electricity licensees.

Dikko said that the notice would be sent to the licensees “a year to the termination of any five-year major tariff in force”. “Every six months, the commission will carry out a minor review of tariff, either at the end of June or at the end of December. “Changes will be made if there is any change in price of fuel and in Nigerian inflation rates, dollar exchange rates, and the daily generation capacity. “The extraordinary tariff review is to be made by licensees to the commission either to give customers discount on tariff or to those that need emergency review to accommodate expansion plans,” he said.

In his speech, Mr Bola Odunbiyi, Executive Director, Regulatory and Stakeholder Affairs, Abuja Electricity Distribution Company, appealed to NERC to ensure that the extraordinary tariff review application was confidential. Odunbiyi explained that it was important that the document was confidential until approved by the commission to avoid theft of business strategies by competitors in the industry. “The fact that any licensee can apply at anytime may create a scattered market which may be Abuja coming in January to ask for a review, Port Harcourt in March and so on. “Also, in the draft of the procedure, NERC noted that the licensees are to consult consumers on tariff increment; we suggest that this phrase be removed because it will slow down or stop the whole process. “The N2 million fee for extraordinary review will be a burden to us because we are already paying NERC a monthly fee to sustain itself; it is unreasonable,’’ he said.

He suggested that it should be reduced and changed to an administrative fee of N250,000 only . Odunbiyi also urged the commission to use forecast prices instead of past prices in setting new tariff.

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