Fresh Review of Discos’ Capital Expenses, Tariff Imminent

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The Nigerian Electricity Regulatory Commission (NERC) may again review the capital expenditure of the 11 respective electricity distribution companies (Discos) in the country’s power sector. The exercise is expected to also impact on the Discos’ tariffs.

The Commission stated this in a recent notice it sent to stakeholders, which it explained would be in line with its statutory bi-annual review of the Multi Year Tariff Order (MYTO), a framework that guides the pricing of electricity in the country.

The disclosure of the impending exercise also coincided with a publication by the Nigeria Bulk Electricity Trading Plc (NBET) which stated that within the first seven months in 2020, power generation companies (Gencos) in the country have largely been underpaid for power they produced and sent to the national grid.

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Section 76 of the Electric Power Sector Reform Act 2005 of NERC Establishment Act empowers it to review the MYTO from time to time for electricity pricing in Nigeria, a close NERC source said in Abuja.

The MYTO sets out the basis, pricing principles and procedures for undertaking minor and major reviews of electricity tariffs in the country. The planned December review would be minor, the source said.

“The MYTO provides a tariff path for the electricity industry, with biannual minor reviews to take into account the impact of changes in a limited number of parameters – specifically inflation, US dollar exchange rate to naira, natural gas price and available generation capacity – and major reviews every five years, when all other inputs are reviewed with stakeholders,” NERC stated.

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It added that, ‘‘Regulation on Procedures for Electricity Tariff Reviews in the Nigerian Electricity Supply Industry,’’ allows for extraordinary tariff review in instances where Discos and others can demonstrate that these parameters have changed from what exists in their current tariff.

Such reviews, it stated would be done in order to maintain industry viability, hence the December review.

By Chibisi Ohakah, Abuja

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