March 16, 2022

Energy Crisis: FG raises electricity tariff amid growing shortage


-Petrol queues return, diesel price rises to N750/l

-MOMAN blames transport challenges

-Grid in slow recovery

By Obas Esiedesa

Federal Government Wednesday admitted that it increased electricity tariff in February after a minor review.

The government had late last year said it was differing any increase in electricity tariff until after it has concluded negotiations with labour unions in the country.

The admission came as ongoing energy crisis facing the country deepened with petrol queues returning to filling stations across Nigeria and the national grid collapsing twice in 36 hours.

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  • Speaking to journalists in Abuja, the Chairman of Nigerian Electricity Regulatory Commission (NERC), Mr. Sanusi Garba said the minor review was conducted in line with Multi-Year Tariff Order (MYTO) that mandates tariff review every six months.
  • Garba said it was the duty of the electricity distribution companies (DisCos) to inform their customers of such tariff review outcome and how the cost of electricity would be.
  • He blamed the continuing poor electricity supply and frequent grid collapses on vandalism of gas pipelines to power plants, plants maintenance and a trip on the 330KV line bringing power from Ughelli Power Plant.
  • According to him, “What happened on February 1 is a minor review of tariff. It is very clear on our website and in all our communications that every six months we will adjust rates to take care of the foreign exchange component of cost and also for inflation.
  • “This is absolutely a straight forward thing but even at that we do publish in newspapers that NERC is about to embark on a minor review to adjust some parameters and when the computation is done it goes into rates which we put on our website and the distribution companies have a responsibility to put it out to consumers”.
  • He said the government was working with operators to bring more generators on grid to fill the vacuum created by water shortage at the hydro plants.

National grid back but generation remains low

After witnessing two collapses in less than two days that left the country in total blackout, the electricity national grid again began a slow recovery yesterday.

Checks on the grid performance by Vanguard showed that as at 3pm yesterday seven power plants were generating a combined total of 1,365.00 megawatts.

Kainji Hydro topped with 391MW, followed Jebba Hydro with 337MW while Geregu (Gas) 267MW; Afam VI (gas and steam) 131MW; Omotosho NIPP (gas) 102.70MW; Olorunsogo (gas) 75.13MW; and Omotosho (gas) 61MW.

 Queues return amidst chaotic scenesLast weekend, petrol queues had abated with more stations opened to customers, but this lasted barely three days as checks by Vanguard around Abuja, the nation’s capital, showed that most of the stations were shut.

At few major marketers’ retail outlets opened, long queues and chaotic scenes were witnessed with security operatives struggling to control vehicles attempting to get into the filling stations illegally.

The energy crisis was compounded by the rising cost of diesel with the product selling at N750 per litre yesterday.

Speaking to Vanguard on the resurgence of queues, Executive Secretary of Major Oil Marketers Association of Nigeria (MOMAN), Mr. Clement Isong expressed surprised, saying there was petrol in Lagos depots and at Suleja depot, close to Abuja.

Mr. Isong who admitted that though there were challenges with transportation to up north due to high cost of diesel, he said operators were working to ensure that the Nigerian Association of Road Transport Owners (NARTO) have enough margins to continue operations.

According to him, “There is product in Lagos. NNPC is bringing in products in Lagos but we are still trying to work with transporters because of the high cost of diesel. It is not easy for the trucks to go the north for a product that the price is capped. It is not easy for them (NARTO) to manage the amount that is allocated to them for bridging products to the north.

“So, some of them have dropped out and we are trying to get them back to the business. Some of them are back but it will take a few days, I imagine but there is product in Lagos and it is moving up. There is product in Suleja but we need to sort out how to do business more efficiently”.

On the daily increase in the price of diesel, he said: “Because diesel is imported and it is deregulated, and as far as the prices continue to go up worldwide, then the price in Nigeria will also go up.

“But I think it is caused by the war in Ukraine, that volatility is what the problem is. I am very hopeful that once refineries in Nigeria start to work, the volatility will be managed better”.

With most truck owners switching to the transportation of dry cargoes rather than transporting petrol, Mr. Isong pointed out that biggest problem was the fixed rate for transporting petroleum products.

“The reason why they left moving PMS and started transporting dry cargoes and other products like diesel and DPK is because they can adjust their rates but if they carry PMS, the rates are fixed. That is the problem with PMS and as long as that is the case they are unable to take on board the increases in their cost.

“It is the same thing with the airlines; the airlines have a problem because they cannot transfer the increased cost of APK to the passengers. What we need to work on is how we remove the volatility from the market”.

He explained that when refining takes place in-country then the market can adopt an average pricing method using prices at Platt as benchmark.

“So, instead of taking Platt on a daily basis, you take Platt based on two or three months and that make prices go up gently but also make it come down gently”, he added.