FG may increase electricity tariffs in urban areas

The federal government may triple energy prices in the coming weeks in a bid to attract new investment and slash about $2.3 billion spent to cap tariffs according to news reports garnered from Bloomberg. Power companies will be allowed to raise prices to N200 naira ($0.15) per kilowatt-hour from N68 naira for urban consumers this month. Urban customers represent 15 per cent of the population that the government says consume 40 per cent of the nation’s electricity. With the latest move, President Bola Ahmed Tinubu, the reports said, wants to cut down on price distortions, which haven’t ended despite breaking the state-owned power firm into 11 distribution companies and several generation firms and selling them to investors. The move to raise the tariff follows pressure from Nigeria’s debt-burdened electricity distribution companies that want to charge a cost-reflective price to improve their finances, the people said. While the country privatized generation and distribution in 2013, tariffs were set by the Nigeria Electricity Regulatory Commission (NERC). The move will also help reduce government spending as it will now only subsidize the poor in rural areas. The intervention gulped around N120 billion naira monthly before authorities devalued the currency at the end of January, Bloomberg said.