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Nigeria’s electricity sector regulator, the Nigerian Electricity Regulatory Commission (NERC), has begun the process of implementing a review of the electricity tariff by asking electricity Distribution Companies (DisCos) to submit plans on how to improve their service.
“The process will involve a review of the application of the capital expenditure allowances in the MYTO model for compliance with Performance Improvement Plans (PIPs) to be prepared by the Distribution Companies (DisCos) and approved by the Commission,” NERC said in guidelines it released for performance improvement plans it published May 10.
Under the current rules, the capital expenditure allowed for DisCos was N305 billion within five years, but this has proven unrealistic as the cost of metering alone for customers in Nigeria would cost N299 billion, according to Sunday Oduntan, executive secretary, Association of Nigerian Electricity Distribution Companies (ANED), at a customer engagement forum in Lagos last week.
So, the DisCos are unable to invest more than the N305bn in capital expenditure otherwise recovery of costs under MYTO will be impossible.
The MYTO is a methodology for determining electricity tariff in the Nigerian Electricity Supply Industry (NESI) and sets out tariffs for the generation, transmission and distribution of electricity in Nigeria. It employs a unified way to determine total industry revenue requirement that is tied to measurable performance improvements and standards.
According to the guidelines for the Performance Improvement Plans (PIPs) set by NERC for DisCos, it will cover the 2020-2024 tariff period but it will be subject to the contractual provisions of the Performance Agreements executed between the core investors and the Bureau of Public Enterprises in respect of the allowances for capital and operating expenditure in the remaining term of the agreement.
NERC will use the PIPs to define … Read More...