Business

FG suspends electricity tariff hike as power subsidy hits N1.6tn

Published

11 months ago

January 18, 2024

FG suspends electricity tariff hike as power subsidy hits N1.6tn

The Nigerian Electricity Regulatory Commission, on Wednesday, released the 2024 electricity tariffs which showed that the Federal Government is to shoulder about N1.6tn subsidy this year to avert electricity tariff hike.

In the tariff review applications of the 11 power distribution companies in Nigeria, the NERC revealed what it approved as their different cost-reflective tariffs and what was allowed as tariffs by the commission following the Federal Government’s subsidy.

The NERC disclosed this in the regulatory instruments on the Multi Year Tariff Order 2024 for the different power distribution companies.

It said the order shall take effect from January 1, 2024, and shall cease to be effective on the issuance of a new tariff review order by NERC for each particular Disco.

The reports indicated that the tariffs should naturally rise considering various economic fundamentals and industry parameters such as the rise in foreign exchange, cost of gas, inflation, among others.

But an analysis of the MYTO 2024 documents for various Discos indicated that the NERC retained the electricity tariffs for 2023, based on the subsidy being paid by the government this year.

Taking Ikeja, Benin and Abuja Discos for instance, while the cost-reflective tariffs approved by NERC for the Discos for 2024 were N112.10/Kilowatt-hour, N126/kWh and N120.88/kWh respectively, what the regulator approved for the power firms were N56.6/kWh, N60.1/kWh and N63.24/kWh respectively.

It was observed that the NERC retained the tariffs charged by the Discos in 2023, as the Federal Government would pay their respective outstanding balance through subsidy this year.

Further analysis of the reports showed that the subsidy for only the month of January 2024 which the government would incur for consumers under Ikeja Disco was N19.85bn; for Benin Disco, N11.74bn; and for Abuja Disco, N19.44bn.

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The cumulative subsidy for the entire year is what the power sector regulator puts at N1.6tn.

It must, however, be stated that what the Discos submitted to the NERC as their own calculated cost-reflective tariffs were far higher than the cost-reflective tariffs approved for them by the regulator.

However, despite approving lower cost-reflective tariffs for the power firms, the allowed tariffs were further reduced, as the balance would be sorted by the N1.6tn subsidy to be paid by the Federal Government.

The Federal Government has been paying subsidies on electricity before now, but it has not been this much.

For instance, on December 18, 2023, The PUNCH exclusively reported that the Federal Government spent N375.8bn on electricity subsidy between January and September 2023, as power consumers paid a total of N782.6bn for the commodity during the same period.

The report stated that in the first quarter of 2023, the Federal Government subsidised power by N36bn, this increased to N135.2bn in the second quarter, and jumped to N204.6bn in the third quarter. Figures for the fourth quarter are not released yet.

The NERC, however, stated on Wednesday that the N1.6tn subsidy for 2024 was too high and stressed that it was not sustainable.

It also revealed that four states had developed their electricity law, while four others were in the process of completing theirs.

Providing explanation on the new tariff order released by the commission, the Chairman, NERC, Sanusi Garba, said, “On the MYTO, I want to correct the wrong impression that for one year we haven’t had any reviews.

“The reality is that the reviews are being done, but what has happened is that what you pay as a customer is a blend of regulation and policy. So if we determine that you should be paying N150 and the Federal Government says ‘no you should pay N60, I will pay the difference,’ then that’s what it is. The government will now provide the money.

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“So that is why in the current tariff order, you will see that this is what you should pay, while this is what the government says you should pay, because the government will provide the difference, until there is a change of policy.”

Also commenting on the development, the Vice Chairman, NERC, Musiliu Oseni, declared that the N1.6tn electricity subsidy was unsustainable, stressing that subsidy was more beneficial to the rich.

He said, “In this order, we provided what the tariffs are supposed to be, and what is being charged based on the subsidy policy of the government. And in each order, you will see the amount of subsidy per Disco.

“And in total, this year we are heading to about N1.6tn subsidy, which most likely everybody here will feel is not sustainable. If nothing is done to electricity tariffs, that is what the subsidy will likely be. Now, how much is the total budget of this country?

“You can do the maths and find out the percentage that that will represent, and whether we should continue to do that. Meanwhile, evidence has shown that it is the rich that benefit more from the so-called subsidy.”

Reacting to what his vice said, Garba stated that “hopefully, going forward, we will focus more on the vulnerable customers in terms of the benefit of subsidy. Then those who can truly afford the true cost of electricity will pay for it.”

On states that have enacted their own electricity laws, the Commissioner, Legal, Licencing and Compliance, NERC, Dafe Akpeneye, said four states now have their own electricity laws, while four others were making finishing touches on theirs.

Outlining states that have developed their power laws, he said, “Basically it is Ondo, Ekiti, Enugu and Anambra. Lagos, Osun, Edo and Kano are work in progress.”

In June 2023, President Bola Tinubu assented to the electricity bill, which empowers states, companies and individuals to generate, transmit, and distribute electricity.

The new electricity law repeals the Electricity and Power Sector Reform Act of 2005 and consolidates the laws relating to the Nigerian Electricity Supply Industry.

Recall that the senate had passed the electricity bill in July 2022 to solve the sector’s challenges.

FG suspends electricity tariff hike as power subsidy hits N1.6tn

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Lagos Rail Mass Transit part of FG free train ride – NRC

Published

19 hours ago

December 21, 2024

Trends Admin

Lagos Rail Mass Transit part of FG free train ride – NRC

The Nigerian Railway Corporation (NRC) has disclosed that the Lagos Rail Mass Transit (LRMT) trains are included in the Federal Government’s free train ride initiative for the Christmas and New Year celebrations.

The LRMT, which currently includes the Phase 1 Blue Line Rail and the Phase 1 of the Red Line Rail, operates under the Lagos Metropolitan Area Transport Authority (LAMATA).

This announcement was made by Ben Iloanusi, the Acting Managing Director of the NRC, during an interview on NTA News TV on Friday, following the launch of the initiative earlier that day.

While Iloanusi stated that Phase 1 of both the Blue Line and Red Line Rail projects are part of the program, LAMATA has yet to confirm this inclusion.

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Iloanusi outlined the other routes benefiting from the scheme, which include the Lagos-Ibadan Train Service, Kaduna-Abuja Train Service, Warri-Itakpe Train Service, Port Harcourt-Aba Train Service, and the Bola Ahmed Tinubu Mass Transit in Lagos. Notably, little was previously known about the Bola Ahmed Tinubu Mass Transit service until this disclosure.

“Let me mention the routes where this free train service is happening. We have the Lagos-Ibadan Train Service, we have the Kaduna-Abuja Train Service, we have the Warri-Itakpe Train Service, we have the Lagos Rail Mass Transit trains, we have the Port Harcourt-Aba Train Service, and we have what we call the Bola Ahmed Tinubu Mass Transit, which is also in Lagos,” he stated.

Iloanusi provided operational updates, stating that passengers nationwide can access free tickets online or, for those unable to do so, at train stations where they will be profiled and validated.

He noted that passengers using NRC-managed services (excluding the Lagos Rail Mass Transit) should reserve tickets via the official website, www.nrc.gov.ng, with a valid ID required. He also advised travelers to plan, arrive on time, and bring valid identification.

Lagos Rail Mass Transit part of FG free train ride – NRC

Business

NNPC denies claim of Port Harcourt refinery shutdown

Published

20 hours ago

December 21, 2024

Trends Admin

Port Harcourt refinery

NNPC denies claim of Port Harcourt refinery shutdown

The Nigerian National Petroleum Company Limited (NNPCL) has denied claims in media reports that the newly refurbished Port Harcourt refinery has shut down.

The national oil company denied the claim in a press release issued by its Chief Corporate Communications Officer, Olufemi Soneye, on Saturday.

Soneye said the claim was false and urged Nigerians to disregard it. He stressed that the Port-Harcourt Refinery is fully operational.

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The statement read, “The attention of the Nigerian National Petroleum Company Limited (NNPC Ltd.) has been drawn to reports in a section of the media alleging that the Old Port Harcourt Refinery which was re-streamed two months ago has been shut down.

“We wish to clarify that such reports are totally false as the refinery is fully operational as verified a few days ago by former Group Managing Directors of NNPC.”

He noted that preparation for the day’s loading operation is currently ongoing, and added that claims of the shutdown are “figments of the imagination of those who want to create artificial scarcity and rip-off Nigerians.”

NNPC denies claim of Port Harcourt refinery shutdown

Business

CBN permits BDCs to buy up to $25,000 FX weekly from NFEM

Published

2 days ago

December 20, 2024

Trends Admin

CBN Governor, Olayemi Cardoso

CBN permits BDCs to buy up to $25,000 FX weekly from NFEM

The Central Bank of Nigeria (CBN) has granted Bureau de Change (BDC) operators temporary permission to purchase up to $25,000 weekly in foreign exchange (FX) from the Nigerian Foreign Exchange Market (NFEM).

This move, detailed in a circular dated December 19, 2024, is designed to meet seasonal retail demand for FX during the holiday period.

The circular was signed by T.G. Allu, on behalf of the Acting Director of the Trade and Exchange Department.

The arrangement will be in effect from December 19, 2024, to January 30, 2025.

Under the directive, BDCs may purchase FX from a single Authorized Dealer of their choice, provided they fully fund their accounts before accessing the market.

Transactions to occur at the prevailing NFEM rate

The transactions will occur at the prevailing NFEM rate, and BDCs are required to adhere to a maximum 1% spread when pricing FX for retail end-users.

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All transactions conducted under this scheme must be reported to the CBN’s Trade and Exchange Department.

The circular read in part:

“In order to meet expected seasonal demand for foreign exchange, the CBN is allowing a temporary access for all existing BDCs to the NFEM for the purchase of FX from Authorised Dealers, subject to a weekly cap of USD 25,000.00 (Twenty-five thousand dollars only).

This window will be open between December 19, 2024 to January 30, 2025.

“BDC operators can purchase FX under this arrangement from only one Authorized Dealer of their choice and will be required to fully fund their account before accessing the market at the prevailing NFEM rate. All transactions with BDCs should be reported to the Trade and Exchange department, and a maximum spread of 1% is allowed on the pricing offered by BDCs to retail end-users.”

The CBN assured the general public that PTA (Personal Travel Allowance) and BTA (Business Travel Allowance) remain available through banks for legitimate travel and business needs.”

These transactions are to be conducted at “market-determined exchange rates” within the NFEM framework.

This initiative reflects the CBN’s strategy to stabilize the FX market and manage seasonal surges in demand.