The Nigerian Electricity Regulatory Commission, NERC, has issued new guidelines for electricity pricing increases in the country’s electrical supply business.
In a recent order, NERC’s Sanusi Garba explained that the 2023 electrical Act requires sector operators to ensure that electrical businesses can cover their reasonable costs, make enough money to continue operating, and earn a fair profit on their investments.
It stated that Section 116(1) of the Act provides that activities in generation, transmission, distribution, trading, supply, system operation, and electricity distribution franchising shall be subject to tariff regulation, noting that Section 116(2) further provides for the commission to develop a tariff methodology that allows licensees operating efficiently to recover the full efficient costs of their business activities, plus a reasonable return on investments by shareholders.
“In exercise of the powers conferred in Section 116 of the Act, the commission has developed and adopted the Multi-Year Tariff Order Methodology as an incentive-based price regulation framework for the determination and projection of tariffs payable in the Nigerian Electricity Supply Industry.”
tariffs supported with the necessary documentation within 120 days of the notice.
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Further, the guideline stated that the Multi-Year Tariff Order approach calls for a comprehensive review of electricity tariffs every five years, during which all tariff assumptions are examined to ensure the industry’s viability and efficiency.
One year before the big tariff hike, the commission stated that it will notify all licensees of its intention, while also requiring that they submit applications for tariff review accompanied by the relevant evidence within 120 days after receiving the notice.
“The commission shall, one year before the expiration of the major tariff review order in force or as may be considered necessary, issue a notice to all licensees about its intention to commence the process for a major review of the existing tariff. The notice shall be published in three national dailies and on the website of the commission,” the order reads in part.
This comes amid controversy that trailed President Bola Ahmed’s special adviser on energy, Olu Verheijen’s comment on the imminent electricity tariff hike.
