The distribution company licensed by the authority to provide electricity supply, DisCos, is on the verge of incurring huge losses due to manufacturers’ refusal to follow the government’s new increase in electricity tariffs.
The Nigerian Electricity Regulatory Commission (NERC) recently issued a directive to the Manufacturers Association of Nigeria (MAN) to stop paying the former N66 kilowatts per hour and move to the new rate, which is charged at N225 kilowatts per hour.
Following the directive of the NERC, which is in line with the federal government and DisCos, the Manufacturers Association of Nigeria (MAN) has decided to ignore the new rates and has admonished its members to follow suit by continuing to pay the former N66 kilowatts per hour.
MAN strongly opposes the new N225 kilowatts per hour and has submitted a petition to the NERC to look into the case properly. They do not like it, considering the dwindling economic situation, which will be further escalated by the hike in the electricity tariff.
The NERC’s decision to hike the electricity tariff is to prevent DisCos from incurring further losses, ranging to billions, due to financial issues the distribution company is struggling with. Adebayo Adelabu, the Minister of Power, further shed light on the situation and the challenges confronting DisCos. He stated that the government has made plans that are already in effect, subsidizing over 50% of the power sector to reduce costs.
DisCos are in a dilemma over the Manufacturers Association of Nigeria (MAN) ‘s current unwillingness to comply with the new hike in electricity tariff. MAN’s decision to ignore the new tariff has put the distribution company at a disadvantage, as they are closer to accruing more losses as the month goes by.
NERC published a recent report expatriating on the losses being incurred by DisCos. The report, published in the fourth quarter of 2023, showed that the distribution company had incurred a total loss of N105.1 billion.
The Manufacturers believe the hike in electricity tariff from N66 kilowatts per hour to N225 kilowatts per hour is a deliberate action targeted at them to ward cost. This is why they have decided to snub the new rates and instead follow the former rate, which has not benefitted DisCos.
In light of this, DisCos has threatened to disconnect all manufacturers who are defaulting on the payment of the new tariff to alleviate the losses incurred.
