On September 1st 2020, the Nigeria Electricity sector officially witnessed the implementation of a cost-reflective tariff for end-users, following presidential approval. Recall that the Multi-Year Tariff Order (MYTO) 2020 which was due for implementation in April and then July, was pushed forward due to the COVID-19 pandemic.
According to the NERC, the new rate will align charges paid by end-users with quality of service provided – measured by average availability of power supply over a one-month period. Hence, users having a power supply below an average of 12-hours per day over a period of one month will not be liable to tariff increase.
Also, unmetered customers within service band A, B, and C, benefitting from average power supply above 12-hours per day shall be protected by the “order on capping of estimated billing”. Lastly, the less privileged members of the society, measured by all users consuming less than 50kWhrs of energy per month, are also protected via a lifeline tariff of N4/kWhr.
Notably, the order seeks to ensure fair pricing for both customers and Discos, in a way that charges are sufficient to recover the cost of operation as well as a reasonable return on investment. Ultimately, the new order is expected to provide a path to transitioning to fully service-based cost-reflective tariffs by July 2021.
United Capital Plc Research