The Nigerian Electricity Regulatory Commission, NERC, said on Monday that a new tariff regime on gas supply to electricity producers in the country will to come into effect on Tuesday.
The Chairman of the Commission, Sam Amadi, said in Abuja that based on the new arrangement, manufacturers and other business owners in the country would henceforth be paying higher electricity prices.
The Chairman, who did not disclose what the new tariff would be, said that it would not adversely affect residential electricity consumers who are expecting a hike in electricity bills in line with the Multi Year Tariff Order, MYTO, the template guiding adjustments of electricity tariffs in the country.
The disclosure came as the Central Bank of Nigeria, CBN, signed a N213 billion financing agreement with some deposit money banks, DMBs, to offset their legacy debts that accrued from their past interventions in the power sector, to open new credit lines to old and new investors in the industry.
The CBN, along with key players in the power sector, including gas suppliers, electricity distribution and generation companies, had, on November 18, signed the N213 billion definitive agreement for the implementation of the CBN-Nigeria Electricity Market Stabilisation Facility, NEMSF.
But Mr. Amadi said the pending new gas tariff regime would ensure adequate supply of gas to power plants towards improved and sustained power supply to attract new investors into the sector.
Though the new arrangement would translate to higher cost of business, and producers of goods and services would naturally transfer part of the cost to consumers, he said the impact on consumers, by way of higher prices for goods and services, would not be immediate.
“The objective of this facility and support is to ensure that the power sector is viable and reliable,” the NERC Chairman said. “Essentially, we have our own commitment, which is basically to ensure cost recovery, both the CBN and the banks that are doing this and for other investors, who may want to invest either in upstream and downstream sectors.”
He said NERC would continue to ensure the tariff is cost-reflective, pointing out that the new measure would not constitute a burden on consumers immediately.
“For avoidance of doubt, there will be no increase in electricity tariff for residential consumers for six months until NERC begins to see improvement in electricity supply,” the Chairman said.
According to him, the expectation is that with more gas coming to the power plants, there would be more reliability in power supply in the next two to four months, with the facility and other interventions aimed at increasing capacity.
Besides, he said the ongoing metering plan would ensure that consumers were more comfortable with increased electricity supply, adding that NERC would ensure that the tariff was ready by Tuesday.
“By tomorrow (Tuesday) we will approve a tariff which is already well known to both the CBN and the transaction advisers as well as the participants from the deposit money banks.
“So, essentially the tariff is guaranteed. It is going to come into effect tomorrow and it will allow for full recovery and ensure that there is no risk that is not fully covered in this transaction,” he explained.
As at Monday, the NERC Chairman noted that with about 4,000 megawatts (MW) of electricity worth over N500 billion market, the expectation was that the facility would deepen the market and ensure good business for the banks and reliable power supply to electricity consumers.
The CBN governor, Godwin Emefiele, said over the years the bank had initiated a number schemes to fund government’s power sector reforms.
The latest agreement, follows an MOU between the Ministries of Petroleum Resources and Power, CBN, NERC and key operators in the sector about a month ago. Mr. Emefiele said would positively impact the sector, in terms of investments and improved gas and electricity supplies on sustainable basis.
Courtesy:premiumtimes
