NERC Announces New Rate for Electricity Tariff as Naira Appreciates Against Dollar
- The Nigerian Electricity Regulatory Commission has reviewed the current electricity cost for the rest of the year
- The review, contained in its Multi Year Tariff Order, was prompted by the currency appreciation seen in the last month
- From the present N1,463.3/$, the regulator announced that the new rate is now N1,277.8/$ and will serve as the benchmark rate
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Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.
The Nigerian Electricity Regulatory Commission (NERC) has announced that the currency rate used to determine Band A consumers' current electricity cost has been lowered by 16.03%.
Source: UGC
NERC cited this in its recently released Multi-Year Tariff Order (MYTO) for May to December 2024.
The electricity regulator consequently said that it slashed the rate from the present N1,463.3/$ to N1,277.8/$ due to the appreciation of the naira against the dollar in the past month.
The Nation reported that the new rate will be the benchmark exchange rate for power tariffs from May to December 2024.
Naira's appreciation triggers increase
Confirming the development, NERC said that the decline is a result of the naira's appreciation since the last MYTO review, which occurred earlier in April.
For instance, in the April MYTO, Ikeja Disco received a monthly electricity subsidy of N18.7 billion. After assessment, this has dropped to N10.866 billion.
Earlier, NERC authorised an 8.1% decrease in band A consumers' electricity rates, which went from N225 per KWh to 206.8/KWh.
The regulator also approved an almost 200% increase in band A consumers' energy cost earlier in April, from roughly N66 per KWh to N225/KWh.
The rise was made possible by a considerable change in the exchange rate used for calculation, which went from N919/$ to N1,463, or an increase of N543.9.
Apart from examining the exchange rate for the new tariff applicable to band A subscribers, minor modifications were made to other factors that created the new pricing.
For instance, the previous order's 31.7% inflation rate for Nigeria was replaced with the most recent data of 33.2%.
The end user permitted rate was also modified, going from N122/KWh in April to N115/KWh in May.
According to the federal government's electricity subsidy scheme, the electricity tariff for Band B to E users has not changed since 2022.
NLC, TUC give Tinubu's govt deadline
In a related development, Legit.ng reported that the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) gave President Bola Tinubu-led government a deadline to reverse the hike in electricity tariffs.
The unions gave the federal government till May 31, 2024, to reverse the hike in electricity tariff.
According to reports, the decision was taken at the end of a jointly held National Executive Council meeting by the unions on Monday, May 20.
Proofreading by James Ojo Adakole, journalist and copy editor at Legit.ng.
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Source: Legit.ng
