DisCos Continue Fight For Electricity Tariffs Hike Approval

Despite public protest, electricity Distribution Companies (DisCos) are persisting in their pursuit of approval from the Federal Government to hike tariffs.

This comes after last week’s decision by the National Electricity Regulatory Commission (NERC) to suspend the 40% tariff increase proposed by the DisCos, a move motivated by a public outcry following the removal of the petrol subsidy.

It has been revealed that a meeting between the DisCos and NERC is scheduled for next week in Abuja.

Although high-ranking officials from two DisCos confirmed the meeting to The Nation, they remained tight-lipped regarding the agenda. However, the proposed tariff increase is believed to be a key discussion point.

Beyond the DisCos, the NERC will also conduct meetings with other power institutions, such as the Transmission Company of Nigeria (TCN) and Generating Companies (GenCos).

NERC has organized a week-long series of meetings with all 11 DisCos, as well as key stakeholders in the electricity supply chain.

Meetings are set to take place from Monday to Friday. On the first two days, NERC will sit down with the managing directors and top management of DisCos, GenCos, and TCN. Major electricity consumers, firms, suppliers, and service providers, such as gas suppliers, will have their turn on Wednesday and Thursday.

Discussions will explore strategies for DisCos to bolster their revenue, particularly in the wake of a 40% loss, as well as ways to fulfil their performance targets.

As per NERC’s June 2023 data, all DisCos recorded losses after surpassing their permitted targets for Aggregate Technical, Commercial, and Collection (ATC & C) losses.

The DisCos have signalled their readiness to strongly advocate for tariff increase approval, although sources suggest that this may be a contentious issue.

An alternative option proposed would be a gradual tariff increase instead of a one-time 40% hike.

However, should this proposal be dismissed, DisCos may request a government subsidy in the form of a “relief package” on their equipment importation and other foreign exchange transactions.

This option, however, seems unlikely given the government’s prior removal of electricity tariff subsidies.

In a virtual meeting with African Finance Ministers (AFM) and the International Monetary Fund (IMF) in March 2022, former Finance Minister Zainab Ahmed disclosed the removal of the electricity subsidy.

“We did that incrementally over time by carefully adjusting the prices at some levels while holding the lower levels down,” she said.

DisCos have stressed that without an increase in tariffs, their continued operation will be threatened.