FOLLOWING an order on the minor review of the Multi-Year Tariff Order (MYTO) which allows for a cost-reflective tariff, the Federal Government (FG) has offered to subsidize electricity tariff for Nigerians between January 1st and July 2020 in line with the Power Sector Recovery Plan (PSRP).
It said the PSRP allows for a gradual transition to cost-reflective tariff so as to cushion the effect on the less privileged in the country.
This is contained in a stack of documents uploaded on NERC’s website, and jointly signed by the Commission’s Chairman James Momoh and Commissioner, Legal, Licensing and Compliance, Dafe Akpeneye.
The Order titled: “the 2016 – 2018 Minor Review of Multi-Year Tariff Order (MYTO) 2015 and Minimum Remittance Order for the year 2019 stated that for this period, the Federal Government(FG) would pay the difference between cost-reflective tariffs determined by the Commission and the actual end-user tariffs.”
It reads: “The PSRP provides for a gradual transition to cost-reflective tariffs with safeguards for the less privileged in the society. It is proposed that an intermediate review in end-user tariffs on January 1, 2020 and transition to full cost reflectivity shall be achieved by July 2020.
“In the interim, the Federal Government, under the PSRP, has committed to fund the revenue gap arising from the difference between cost-reflective tariffs determined by the Commission and the actual end-user tariffs.”
Under this arrangement, the Commission mandated the DisCos to settle their market invoices in full in line with the applicable tariff shortfall approved by it.
It added that the intervention from the financing plan of the PSRP for funding tariff shortfall would be applied through NBET and Market Operators(MO) to ensure 100% settlement of market invoices.
The Commission also ordered the 11 electricity distribution companies (DisCos) to meter all Ministries, Departments and Agencies (MDAs) of States and Federal Government with appropriate meters of their choice within 60 days.
It said this is to guide against bad debts, stressing that the DisCos reserve the right to disconnect any MDAs defaulting in the payment for electricity, in line with the Regulation on Connection and Disconnection Procedures for Electricity Services.
The documents further gave conditions for settlement of historical debts accrued by each DisCo due to tariff shortfall.
According to it, the tariff shortfall accrued between 2015-2018 would be settled in line with the Power Sector Recovery Plan (PSRP) but noted that the DisCos would bear the liability for the market shortfall as a result of non-remittance to the Nigerian Bulk Exchange Trading (NBET) PLC.
