NEW ELECTRICITY TARIFF TAKES EFFECT JAN 2012

Executive Chairman, NERC, Dr. Sam Amadi
The new electricity tariff being proposed in line with the ongoing reforms in the power sector will take effect from January 2012, the Chairman, Nigerian Electricity Regulatory Commission, Dr. Sam Amadi, has said.

Amadi, who disclosed this during a workshop on the major review of the Multi-Year Tariff Order in Abuja on Tuesday, said President Goodluck Jonathan had granted the approval for the new tariff to take effect in January.

He said that the reforms were hinged on the ability of price to play its natural role of catalysing efficient allocation of resources, thereby promoting availability, affordability and accessibility of electric power to all Nigerians.

He said that the approval would enable the commission to engage further with all stakeholders and also align the review date with the calendar of most businesses, especially those in the Nigerian electricity supply industry.

Amadi added that the workshop was one in a series of consultations that would culminate in the major review of the current MYTO as well as the publication of a MYTO 2.

He said that the commission would spare no effort in ensuring that data supplied by operators for the process were subjected to the highest level of scrutiny and verification to demonstrate fairness to all stakeholders.

He noted that the MYTO provided for a periodic review of the cost parameters through the minor annual and major five-year review windows, adding that the annual review of framework took into cognisance changes in gas price, inflation and exchange rates, while the major review considered holistic changes in major parameters.

'The review is aimed at ensuring that prices at all times reflect the prevailing economic circumstances in Nigeria. It is on the record that, between 2008 and now, the MYTO has undergone two minor reviews in line with the methodology,' he said.

He observed that, despite these attributes of MYTO, the market had yet to become robust, adding that it had also failed to achieve optimum efficiency and milestones as envisaged by the commission.

He said, 'The much needed private sector investment, especially in the distribution sector, has not materialised. And this is likely to continue as long as the Federal Government continues to hold on to the responsibility for policy making, regulatory and operational management across the three sectors of the NESI.

'Such market imperfections as low generation capacity, low private sector participation, high and unprecedented operating costs and overheads still abound in the industry today as in 2008. Prompt payment for gas feedstock has persistently been difficult even as gas supply has improved in the last few months.'

Amadi said that the general belief in the electricity sector was that the current MYTO prices still could not support investments therein as they were much lower than in most developing countries.

'We cannot give in to these frustrations if we must succeed. We must confront the pricing challenge while taking into consideration the prevailing economic situation of our country folk. All over the world, prices have played a dual role.'