Discos Hike Band A Electricity Tariff, Cite Rising Operating Costs

Discos Raise Electricity Tariff, Citing Rising Operating Costs

by Motoni Olodun
Nigerian electricity distribution companies (Discos) have announced an increase in the Band A electricity tariff, attributing the hike to rising operating costs. This development has sparked widespread concern among consumers, who are already grappling with economic challenges.

The Discos, responsible for distributing power to end-users, have cited several factors driving the tariff increase. These include the escalating costs of fuel, maintenance, and general operational expenses. The new tariffs, effective immediately, will see consumers in Band A—typically the highest electricity consumption category—paying more for their power usage.

In a statement, the Association of Nigerian Electricity Distributors (ANED) justified the tariff adjustment as a necessary response to the financial pressures faced by the sector. “The increase in operating costs, driven by inflation and other economic factors, has necessitated this adjustment to ensure the sustainability of power supply,” said Sunday Oduntan, Executive Director of ANED.

The decision has drawn criticism from various quarters, with consumer advocacy groups expressing concern over the impact on households and businesses. “This tariff hike will undoubtedly burden consumers who are already struggling with high living costs,” said Adeola Adeniyi, a spokesperson for the Consumer Protection Network. “We urge the Discos to consider the plight of ordinary Nigerians and explore alternative measures to manage their operating costs.”

The electricity sector in Nigeria has long been fraught with challenges, including inadequate infrastructure, inefficiencies, and financial instability. The tariff increase is seen as a move to address some of these issues, but it also highlights the ongoing struggle to balance cost recovery with affordability.

Economic analysts warn that the tariff hike could have broader implications for the economy. “Higher electricity costs can lead to increased production costs for businesses, which may translate into higher prices for goods and services,” explained Dr. Tunde Adekoya, an economist at the University of Lagos. “This could exacerbate inflationary pressures and affect economic growth.”

Despite the criticism, the Discos maintain that the tariff adjustment is critical for sustaining operations and improving service delivery. “We are committed to providing reliable power supply, and this requires adequate funding to cover our operating expenses,” stated John Okoro, CEO of a leading Disco. “The tariff increase is a difficult but necessary step to ensure the viability of the sector.”

In response to the public outcry, the Nigerian Electricity Regulatory Commission (NERC) has promised to review the tariff structure and ensure that the increase is justified and equitable. “We will engage with the Discos and other stakeholders to ensure that the tariff adjustment is fair and reflects the current economic realities,” said James Momoh, Chairman of NERC.

The government has also weighed in on the issue, emphasizing the need for a balanced approach that protects consumers while supporting the sustainability of the electricity sector. “We recognize the challenges faced by the Discos, but we must also ensure that electricity remains affordable for Nigerians,” said Sale Mamman, Minister of Power. “We are working on policies to support the sector and mitigate the impact of tariff increases on consumers.”

As Nigerians brace for higher electricity bills, there is hope that the increased revenue for Discos will translate into better service delivery and reduced power outages. The government and regulatory bodies are expected to play a critical role in monitoring the situation and ensuring that the interests of consumers are safeguarded.

In these trying times, the focus remains on finding a sustainable solution that balances the financial viability of the electricity sector with the need to make power affordable for all Nigerians. The path forward will require collaborative efforts from all stakeholders to navigate the complex challenges facing the industry.

Source: businessday.ng

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