Nigeria extends suspension of new electricity tariff by one week

The Nigerian government and labor unions have extended the suspension of the new service-based electricity tariffs by one week to allow for further consultations and the development of a comprehensive understanding of the tariff structure. The decision comes after intense discussions between the government and labor unions, with labor demanding a reduction in prices based on a clear understanding of all components that constitute the tariff. This includes factors such as gas pricing, generation costs, transmission costs, distribution costs, forex rates, and other elements. The extension until December 12 will provide more time to evaluate the value chain and come to a mutual agreement. During this one-week extension, consumers will continue to pay the old tariffs, and the government will provide relief in the form of VAT waivers. Consumers in different bands will see reductions in their tariffs, with band A experiencing a 10% reduction, band B a 10.5% reduction, and band C a 31% reduction. The upcoming weeks will be crucial in finalizing the new tariff structure and ensuring a fair outcome for all stakeholders. Metering also plays a significant role in the tariff discussions. Approximately one million meters are currently available and will be rolled out immediately, with a target of metering all customers by the end of December. An aggressive metering program, supported by various entities, will ensure that all customers are eventually metered to prevent discrepancies in billing. Additionally, customers in bands D and E, who have a tariff freeze, will not migrate to other bands during this interim period to protect them from potential issues due to being unmetered. The distribution companies are closely monitoring the developments and are prepared to implement the new tariffs once the structure is finalized. Adjustments for metered and postpaid customers will be made to account for the suspension period and ensure a smooth transition to the new tariffs. The discourse, representing distribution companies, sees the new tariff regime as essential for attracting investments in the industry and improving service quality. While mindful of the challenges faced by consumers, especially during the pandemic, the discourse is committed to making necessary investments to enhance the network infrastructure and meet service level agreements. The shift towards a contract-based market will hold all parties accountable for meeting their obligations, ensuring a more transparent and efficient electricity supply industry in Nigeria. This development marks a significant milestone in Nigeria's electricity sector and sets the stage for a new era of accountability and sustainability.