Nigeria’s electricity distribution companies (DisCos) have announced an upward review of electricity tariffs for Band A customers, set to take effect from July 1, 2024. The increase, disclosed by various DisCos on their X handles, follows an April directive by the Nigerian Electricity Regulatory Commission (NERC) for an immediate tariff hike.
The new tariff will increase prices from N206.80/kWh to N209.5/kWh. NERC Vice Chairman, Musiliu Oseni, stated in April that only 15 percent of electricity consumers would be affected by this hike, which aims to adjust prices to N225 ($0.15) per kilowatt-hour from N68.
The decision to raise tariffs initially sparked significant backlash. On April 30, the House of Representatives requested NERC to suspend the tariff hike pending an investigation. This resolution was prompted by a motion from Kama Nkem-Kanma (LP, Ebonyi), who criticized the arbitrary and discriminatory nature of the policy.
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In response to the House’s resolution, DisCos announced a temporary tariff reduction on May 6, lowering the Band A customer rate from N225/kWh to N206.80/kWh. However, the recent announcement indicates a new upward adjustment to N209.5/kWh, with tariffs for Bands B, C, D, and E remaining unchanged.
Various DisCos have issued statements announcing the tariff changes.
Port Harcourt Electricity Distribution Plc (PHED) said: “Dear esteemed customers, please be informed that there is an upward tariff review for our Band A feeders from N206.80/kWh to N209.5/kwh effective 1st July 2024. The guaranteed availability of a minimum of 20 hours per day still stands. The tariff for Bands B, C, D, and E remains unchanged.”
In its announcement, Kaduna Electricity Distribution Company (Kaduna Electric) declared: “Dear esteemed customers, the management of Kaduna Electric informs the public of an upward review in the tariff of Band A feeders from N206.80/kWh to N209.5/kWh. The review is effective from 1st July 2024 and affects prepaid and postpaid customers. Kaduna Electric assures customers on its Band A feeders of the continued availability of 20-24 hours daily as stipulated in the service-based tariff regime. The public should please note that the tariff for Bands B, C, D, and E remains unchanged.”
Economic Impact of the New Tariff Get Weightier
The tariff increase has sent shockwaves through Nigeria’s manufacturing sector, leading to the closure of over 300 companies and the loss of 380,000 jobs since April 2024, according to the Manufacturers Association of Nigeria (MAN).
MAN has voiced deep concerns over the crippling impact of the tariff hike, noting that electricity costs now constitute about 40% of production overheads for manufacturers. This has severely affected their financial viability, leading to widespread job losses and factory shutdowns.
Senator Ahmed Abdulkadir, speaking on behalf of MAN at an investigative hearing organized by the Joint Committees on Power, Commerce, National Planning & Economic Development, and Delegated Legislation, criticized NERC’s process.
He asserted that the April 3, 2024, supplementary order raising the tariff was never properly communicated to the public and accused DisCos of neglecting consumer consultation guidelines.
“Electricity costs now make up a significant portion of production overheads, making it nearly impossible for manufacturers to remain financially viable. The result has been widespread job losses and factory shutdowns,” Abdulkadir said, highlighting the detrimental effects of the tariff on the real economy.
The education sector has also been severely impacted by the tariff hike. Higher institutions are struggling to pay exorbitant electricity bills, with the University of Port Harcourt reportedly paying as much as N30 million for one month.
Others, such as the University of Benin, University of Jos, and Aliko Dangote University have been disconnected from the national grid for their inability to pay the exorbitant bills.
Deborah Tolu-Kolawole, an education reporter with the Punch, highlighted these issues on X, urging for intervention to save the universities from collapse.
She said, “It is time to speak therefore I will not be silent. Our universities are collapsing over rising cost of electricity. Some universities such as University of Benin, University of Jos, Aliko Dangote University have been disconnected from the national grid. The electricity bill of the University of Ilorin is now N230M per month, and ABU says it can no longer survive. Save our universities from collapse.”
In defense of the tariff hike, Minister of Power Adebayo Adelabu argued that the Federal Government could no longer sustain the N3 trillion subsidy for electricity. He highlighted that the removal of subsidies for Band A customers was essential to prevent the government from accruing unsustainable debts.
Recently, a Lagos High Court temporarily ordered NERC and ten DisCos not to implement the new tariffs following a suit filed by MAN challenging the hike. The court’s decision came after MAN filed a suit challenging the tariff hike.
Additionally, in May, the House of Representatives ordered NERC to suspend the implementation of the new tariff order. Despite these interventions, NERC has continued to bill Band A customers according to the new tariff order.