Again, FG increases electricity tariff amid rising poverty

THE President Muhammadu Buhari-led federal government has again approved a 50 percent increase in electricity tariff payable by electricity consumers in the country.

The new tariff increase, which, according to Daily Trust, lasts from January to June 2021, was approved by the new chairman of the Nigerian Electricity Regulatory Commission (NERC), Sanusi Garba, on December 30, 2020.

In the revised Multi Year Tariff Order (MYTO), the NERC said it considered the 14.9 percent inflation rate rise in November 2020, foreign exchange of N379.4/$1 as of December 29, 2020, available generation capacity, US inflation rate of 1.22 percent and the capital expenditures (CAPEX) of the power firms to raise the tariff.

The revised Service Based Tariff (SBT) also saw an increase in the rates payable by all classes of electricity users unlike the one of November 2020 that exempted low power consumers.

A Cost-Reflective Tariff (CRT) expected to raise the new cost higher will be activated from June to December 2021.

Read also: Data Speak: Nigeria’s electricity customers increased but revenue reduced

The new increment is coming barely two months after the implementation of the controversial hike proposed last year.

    NERC had raised tariff for the DisCos in September but that drew outrage from customers and the organised labour, prompting the federal government to suspend it while parties dialogued.

    By November 1, 2020, the suspended tariff was implemented after some discounts were given for customers getting 12 hours and above power supply daily.

    However, those with less than 12 hour supply did not get a tariff hike, according to the NERC order of November 2020.

    Nigeria became poverty capital of the world in 2018, with 87 million citizens in extreme poverty, according to the Brookings Institute’s World Poverty Clock. Extreme poverty means living below $1.90 a day, according to the World Bank. Hike in electricity tariff could further shrink Nigerians’ wallets, pushing more people into poverty. Inflation rate in Nigeria rose to 14.89 percent in November 2020, from 14.2 percent in October.

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