The Nation Newspaper

Tag: NERC

  • Jonathan directs NERC to reduce electricity tariff

    •As Discos record over 50% commercial losses

    PRESIDENT Goodluck Jonathan has directed the Nigerian Electricity Regulatory Commission (NERC) chairman, Dr. Sam Amadi, to reduce electricity tariff, it was learnt at the weekend.

    The commission operationalised a tariff hike for industrial customers January  1 this year and exempted residential consumers from increase for six months.

    Stakeholders such as the Manufacturers Association of Nigerian had protested the review and threatened to shut down should the commission refuse to prune the tariff.

    But speaking with The Nation at Abuja at the weekend, the Minister of Power Prof. Chinedu Nebo said  that following the  president’s directive NERC is now working on what percentage  of the tariff to reduce.

    “The president has given the chairman of NERC a directive to review the tariff downward,” he said, stressing that The minister also said  that the federal government was yet to remit the N50 billion electricity subsidy because of the dwindling oil revenue.

    His words: “It is not easy for all this money to be released. Things are really tough right now. When the price of oil goes from $170 down to $50 even though it has gradually hit up to $60, you know that the revenue accruable to the country is woefully low… If the resources are not there we can’t keep pressing for them. That is the situation now.”

    He said that the commercial losses now  incurred by the electricity distribution companies (Discos) are very huge due to electricity theft.

    He said: “They are huge.  It depends on Discos . The one of Lagos is much less than the ones of Yola  and Enugu. Some are recording over 50 per cent losses. They are very huge. That is why the tariff are not very palatable.”

    The minister revealed that the Federal Government is trying to get a model for its privatisation of the Transmission Company of Nigeria (TCN) since it may not adopt the same model used for the privatisation of the Discos and Gencos .

  • NERC to reduce tariff for manufacturers

    NERC to reduce tariff for manufacturers

    Chairman, Nigerian Electricity Regulatory Commission (NERC) Dr. Sam Amadi has offered to review the Muti-Year Tariff Order (MYTO) following the threat of the Manufacturers Association of Nigeria (MAN) to shut down.

    Speaking with journalists after a forum with the association, he noted that the commission “will ensure that price does not destroy the industrial base of” Nigeria.

    He described MAN as the best partner of the commission  for articulating its position in a very civil manner due to its trust for the regulator to balance the facts.

    Amadi submitted that MAN has a good case because they have witnessed sharp increase in tariff. He assured that NERC will be going back to review the causer factors, including loss and projections to see a way to bring down the price.

    MAN had asked the commission for a reduction in the at the fixed charge should be reduced from the initial average of N250,000 to N25,000 particularly for Small and Medium Industries (SMEs) across board.

    The  president Frank Udemba Jacobs, who presented the position of the association, sought that the fixed price should be pro-rated, based on the amount of energy consumed by companies.

    He requested that the manufacturers should continue to operate the old MYTO rate, pending the life of its tenure of 2017.

    The association also asked that NERC should consider a uniform tariff for all manufacturers in Nigeria regardless of wherever they may be located, rather than giving some companies a preferential lower advantage over the others because of their geographical location.

    He observed that the MYTO 2012 -2017 that was meant to run for five years formed the basis of their long term planning which the commission’s sudden increase has now seriously interrupted.

    MAN  asked the commission to prevail on the Electricity Distribution Companies (Discos) not to disconnect the manufacturers for the outstanding debt.

    The commission commenced a new tariff regime in on January 1, this year with a tariff increase that the association described as unfair and astronomical, refusing to pay it.

    Responding to the issue of disconnecting, Amadi noted that no  Disco is allowed to disconnect consumers without following due process.

    According to him,  “you have to give them notice and if they contest that notice for other reasons you have to follow other processes. Otherwise if you allow unwonted disconnection it will destroy the purpose of have electricity. No distribution company is allowed to indiscriminately disconnect consumers.”

  • NERC issues four on-grid 1, 200MW licences

    • Fed Govt eyes additional 500MW from coal

    The Nigerian Electricity Regulatory Commission (NERC) over the weekend issued four on-grid licenses to Zuma Energy Nigeria Limited to operate a combined 1,200 Megawatts (MW) power plant at Itobe, Kogi state.

    Each unit of the power plant has capacity to generate 300MW, according to a statement from the Commission’s Head, Public Affairs, Dr. Usman Abba Arabi.

    This brings to two such licenses issued for coal power generation this year.

    Zuma’s licence is an amendment to an earlier one issued in 2011. The amendment is to enable it assign the licence to four different Special Purpose Vehicles (SPVs) for ease of project financing.

    NERC’s Chairman /CEO, Dr Sam Amadi, said Zuma Energy is a major stakeholder and a pathfinder in coal-powered generation which is guiding Nigeria towards diversifying electricity generation.

    “The beauty of Zuma licence is that it is guiding Nigeria towards diversifying power generation,” he said.

    In line with the Transitional Electricity Market stage recently declared by the Commission, Amadi urged the firm to work towards securing a power purchase agreement through the Nigeria Bulk Electricity Trading so that it could commence operations in the not too distant time.

    He urged the company to expedite action on its construction work with the same vigour with which it pursued its licences and make electricity available to Nigerians through the power plants.

    The four entities are Itobe 1-300mw; Itobe 2, 300mw; Itobe 3, 300mw and Itobe 4, 300mw all are coal powered plants.

    Managing Director, Zuma Energy Power Limited., Dr. Innocent Ezuma in his response, said the amendment to an earlier licence which led to the issuance of four different licences was for ease of implementation.

    “With this sub-division, it means we can commence work on two plants simultaneously.”

    Meanwhile, Power Minister, Prof. Chinedu Nebo has said that an additional 500MW to the national grid via coal is expected to be realised from the agreement with One Nation Energy Platform Limited.

    He described it as a welcome development for government’s quest for a robust energy mix that would support the nation’s aspiration for development of the power sector.

    The Minister also noted that the coal-power project will also provide stable power, devoid of challenges of sabotage from vandals who were determined to frustrate the present administration’s effort at providing adequate and reliable power to all Nigerians.

    The Minister who was speaking at the signing ceremony of Memorandum of Understanding (MoU) for 500MW coal-fired power plant in Enugu by One Nation Energy Platform Ltd, stated that Nigeria was blessed with abundance of coal deposits, with Enugu being the hub.

    According to the Minister, citing the coal powered plant in the Enugu axis was a welcome development as Ugwuaji, one of the settlements in Enugu State, houses one of the biggest transmission Sub-station in the country, hence evacuation of the power generated will not be a problem.

    The Minister who described the coal deposit in Nigeria as very clean, stated that the processing of the mineral resource for energy delivery will not be a cumbersome process. He further said that the South East zone alone has enough coal deposits to deliver 5,000MW of coal fired power, adding that the area also provides a veritable corridor of power supply to both the South East and the Northern part of the country.

  • Minister of Power, D.G NERC must hear this!

    SIR: I bought aprepaid meter no 04216337701 with account no 24/38/22/4958-01, in Ungwan-Romi, Makera Business Unit, Kaduna State.

    On October 28, 2014, the PHCN manager in-charge of Ungwan-Romi, Kaduna, a suburb of Kaduna metropolis came to my house and removed the prepaid meter including a coil of my service wire. I was neither told of any offence committed nor given prior notice for the action.

    The meter, for which I paid N25,000 was carted away with 61.24 units unused. I reported the case to nearby police station and after investigation, the Romi PHCN manager confirmed that he removed it. He agreed to return it but to my astonishment, nothing has happened ever since despite several calls, verbal messages and promises.

    A letter was written to the managing director of the company in-charge of Kaduna Distribution Centre on December 4, 2014 to intimate him on the issue. This was followed with a reminder on January 5. Nothing has been heard from his office since.

    What baffles me is that the rules and regulations of Nigerian Electricity Regulatory Commission (NERC) under Connections and Disconnections procedures for electricity services, in section 2 subsections 2:1 (especially 2:1 appendix ix) clearly states that on no account should a prepaid or meter generally be removed without a letter of notice or without the consent of the customer.

    Imagine if it was a customer that was involved in any form of illegal connection; the officials will not waste time to slap a penalty of N50,000. Interestingly, the same law that punishes the customer also imposes penalty on  the distribution company involved wrongfully disconnection. Now it is me a customer that is affected; does it mean the PHCN is above the law?  If I, as a customer after waiting for them for over three months now decide to go and connect myself, what will they now say?

    After all, the Commissioner, Government and Consumer Affairs of the Nigerian Electricity Regulatory Commission (NERC) Dr. Abba Ibrahim is on record to have told a consultative meeting of electricity consumers, stakeholders and the NERC in Ilorin, Kwara state on Thursday May 17, 2012 that consumers “cannot be disconnected without being served notice because distribution companies are service providers”.

    I call on the Minister of Power, Professor Chinedu Nebo and Director General, NERC Dr. Sam Amadi and other concerned authorities to look into the issues raised in this petition.

     

    • Ojodomo Onoja,

    Kaduna.

  • NERC, manufacturers disagree on ‘fixed charges’ removal

    NERC, manufacturers disagree on ‘fixed charges’ removal

    Talks between the Nigerian Electricity Regulatory Commission (NERC) and the Manufacturers Association of Nigeria (MAN) on the scrapping of fixed charges have reached a deadlock.

    Customers pay N750 monthly as fixed charges to the distribution companies whether or not they enjoy their services.

    The stalemate, The Nation learnt, arose from the NERC’s insistence   that consumers must continue to pay fixed charges in line with the  Multi-Year Tariff Order (MYTO). It  argued that MYTO was scientifically determined bearing in mind all the variables involved in the production and distribution of power, but the organised private sector (OPS) is saying a ‘no’ to the proposition. MAN contends that it cannot afford to continue to pay for electricity, which it hardly accessed for it operations.

    To MAN the payment of fixed charges is arbitrary and killing.

    Lagos Chamber of Commerce and Industry (LCCS) Director-General  Muda Yusuf, told The Nation that  the chamber has met with the NERC Chairman  Dr. Sam Amadi on the need to scrap  fixed charges.  He said the OPS  at conferences, workshops and seminars, among others, appealed to NERC to scrap fixed charges  but regretted that  no agreement has been reached.

    Yusuf said issues, such as the scrapping of fixed charges, assisting manufacturers to own power plants, either separately or as a group via providing effective operational framework in the industry have come up between MAN and NERC on several occasions, adding that the discussions have come to a head because neither the NERC, nor MAN and LCCI are ready to let go.

    He said manufacturers are putting in place measures  aimed at strengthening advocacy on the issue by taking the matter to the Presidency,  National Assembly, Civil Liberties Organisations (CLO) and other pressure groups that would help them in achieving their goals.

    Yusuf said: “In advocacy, one needs to explore all the available options to achieve the desired results. What matters most is the end, not the means to the end.  From all indications, the two parties involved in the issue are not ready to shift ground.  While NERC is not willing to change the  regulatory frameworks by removing fixed charges, MAN and other relevant bodies are not ready to stop agitating for things that would benefit them.

    ‘’MAN has agreed to use any opportunities at its disposal to press home its demand. If MAN and other relevant institutions have complained severally to NERC on the issue of scrapping fixed charges without getting the desired results, we (MAN and LCCI) will sustain our advocacy by meeting agencies that by law, are stronger in outlook.’’

    He urged the Federal Government to reduce the price of diesel, the same way it reduced the price of Premium Motor Spirit(PMS)-petrol,  from N97 per litre to N87 to enable manufacturers contribute to the growth of the economy, stressing that there is the need for Petroleum Product Pricing Regulatory Agency (PPPRA)) to reduce the price of diesel since real sector operators use the product to fuel their generators.

    ‘’ Given the fact that the country is experiencing poor power supply, occasioned by the perennial gas problems in the sector, the manufacturing industry has no choice than to resort to the production of alternative energy sources. We spend billions of naira on diesel in a year, aside the fact that many of the firms have their own independent power plants,’’ he said.

    Also, MAN’s Director-General, Remi Ogunmefun, said the body has begun a preliminary discussion on the increase in tariff of commercial users of electricity by NERC on January 1, this year to enable it take a position on the issue. He said the body’s concern is on the tariff for commercial users of energy, and not the planned increase in tariff for individuals by June this year.

    Ogunmefun said the issue of tariff increase is of great importance to the manufacturers because it forms a major part of their production cost.

    The Chairman, Infrastructure Committee, MAN, Reginald Odiah said manufacturers are aware of the problems which poor electricity supply posed to the sector and the economy, and have taken precautionary methods to safeguard their investments.

    He said companies have resolved to build their own power plants to prevent production hitches and stay afloat of the competition. Odiah said the cost of electricity differs from one company to another, arguing that many operators have either wound up operation or relocated to neighbouring countries, such as Ghana and Cote de’ Ivoire where they hope to enjoy a comparative advantage.

    Odiah said power supply has not improved, a year after the government sold the assets of the Power holding Company of Nigeria (PHCN) to 15 private investors

    ‘’Problems, such as huge tariff, poor electricity supply, among others, made companies to build their own power plants. Plants have been built to take care of companies in the Ogun-Lagos axis to improve production of goods and further help in growing the economy,’’ he said.

    Meanwhile, NERC has said it was not ready to cancel fixed charges. Its boss, Amadi said the agency was committed to the provision of enabling environment for power generation companies (GENCOs), distribution companies (DISCOs) and other operators within the electricity value chain.

    Nebo, at a stakeholders forum in Lagos last year, said it would not be doing operators good if it removes fixed charges.

  • Nigerians to pay more for electricity

    Nigerians to pay more for electricity

    •Govt unfolds new tariff today 

    INDUSTRIAL and commercial consumers are to pay more for every unit of electricity they use. The Nigerian Electricity Regulatory Commission (NERC) will unveil a new tariff regime today, it was learnt yesterday.

    The new regime will be extended to residential consumers in six months, the NERC said.

    According to its chairman, Dr. Sam Amadi, the new tariff, “is already well known to both the Central Bank of Nigeria (CBN) and the transaction advisers as well as the participants from the deposit money banks.”

    Amadi broke the news yesterday in Abuja at the signing of a Memorandum of Understanding (MoU) between the CBN and all the Deposit Money Banks (DMBs) for the N213 billion legacy debt funding for the power sector.

    He, however, assured Nigerians that the Commission will “ensure that the tariff is cost-reflective, it will not constitute a burden on consumers immediately and so for avoidance of doubt with this facility, there will be no increase in electricity tariff for residential consumers for six months until we begin to see improvement.”

    Essentially, the tariff, Amadi explained “is guaranteed to come into effect tomorrow (today) and it allows for full recovery and ensures that there is no risk that is not fully covered in this transaction.”

    He said that NERC expected more gas inflow to the power stations with the injection of N213 billion.

    He said: “This facility and other interventions in the next two, three, four months will bring about increase in capacity, there will be more reliability and the metering plan that is ongoing will ensure that consumers will be much more comfortable as they will witness increase in power supply.”

    The objective of the N213 billion legacy debt facility was to make the power sector viable and reliable.

    Amadi restated the Commission’s commitment to cost recovery by both the CBN and the designated banks in providing the fund and for other investors, who may want to invest either in upstream and downstream of the power sector.

    The funding facility, Amadi stated “is about viability and with just 4,000 megawatts worth over N500 billion market, we expect that this facility will deepen the market and ensure not just a good business for the banks but also provide reliable power supply to Nigerian homes.”

    CBN Governor Mr. Godwin Emefiele said they were “taking this bold step at this stage to now help the banks, who are themselves going to act as channels through which these funds would be paid to the discos and the GENCOS and the gas suppliers to come in to also sign their Memorandum of Understanding at the Central Bank of Nigeria with the NERC and CBN.”

    Nigerian banks, he said, are predominantly the creditors in the books which further demonstrates the commitment of the banks to continue to support the growth of the power sector.

    Emefiele stated that the N213 billion power sector intervention fund will ensure that “the least legacy debts that we have are cleared so that the market can be seen to be viable, and electricity can be begin to be generated and distribution improved upon for the good of our people.”

    He said that gas tariff was subsequently reviewed to $2.50 whereas transportation was improved to 80 cents, increasing the gas tariff to about $2.80 cents.

    Emefiele said the International Oil Companies (IOCs) the gas suppliers, have been assured that the present gas price will be commercially viable.

    “Not only that, it will encourage them to improve on the gas production and supply but will indeed also encourage new investors to come into the market and then we can see a boost in the gas production industry in Nigeria,” the CBN chief said.

  • NERC probes DISCOs’ load allocation rejection

    NERC probes DISCOs’ load allocation rejection

    • To deduct opening balance, VAT at source

    The Nigerian Electricity Regulatory Commission (NERC) has commenced investigation into why some Electricity Distribution Companies (DISCOs) are rejecting electricity load allocated to them.

    Its Chairman, Dr. Sam Amadi, who spoke with The Nation in Abuja, yesterday insisted that the DISCOs were not supposed to turn down the allocation offer.

    He however said some of the firms might have rejected their allocations due to network and capacity constraints.

    The chairman added that some of the firms might be afraid of paying the excess charge of accepting load allocation that is beyond their capacity.

    He said: “The companies might be rejecting load allocation because in some cases due to network constraint, some DISCOs may genuinely have distribution network and therefore they cannot take what is allocated to them.

    “Or in negative sense, when they are afraid of paying the excess charges when they have exceeded their capacity and they are given extra load they have to pay for.

    “So, we are investigating; we have asked our people to find out whether the DISCOs have genuine reasons. May be they are afraid of taking more than what they can sell.”

    Amadi also commented  on his  October 8 letter that mandated the the firms to pay their opening balance to the Nigeria Electricity Liability Management Company (NELMCO) and outstanding Value Added Tax (VAT) to Federal Inland Revenue Service (FIRS).

    In the letter, the commission requested the DISCOs the fund to NELCOM and FIRS or face the fine  of paying N10,000 per hour from October 17.

    The chairman recalled that the DISCOs appealed that they had paid but it was discovered that they were wrong.

  • NERC: Tariff hiking commission?

    •Consumers are in for dark times ahead as another tariff hike takes effect this month

    Electricity consumers in Nigeria must have concluded that the Nigerian Electricity Regulatory Commission (NERC) is set up for the sole purpose of increasing electricity tariff and inflicting pain on the consumer. And on the face of it, NERC does not seem to do anything else nor is it remembered for carrying out any regulatory functions since its inception about seven years ago.

    NERC’s announcement last week of another tariff hike this month must have left the long-suffering Nigerian electricity consumer in deep angst. This is probably the third this year in a power environment that is rancid with graft, mindless opportunism, inadequate supply and shoddy service. The consumer is paying too much as it is and cannot see any justification for paying more.

    But NERC cites a $1 increase in the price of gas to power plants as the major driver of this review. Other factors warranting this current tariff review include inflation, foreign exchange rate and power generation capacity. Speaking during the meeting with industry stakeholders on the bi-annual minor review of the Multi-Year Tariff Order – 2 (MYTO), NERC vice chairman, Mr. Mohammed Bello rued the incongruence of a necessary upward review of tariff though power situation had yet to improve.

    Bello noted: “From what I have seen in the initial report, not much has changed. The tariff review is a sensitive issue to the consumer who considers paying higher and not seeing improvement in electricity supply. But there is a general consensus that this is the way to go. By paying what is due this is how the power will begin to improve.”

    Obviously the consumer is not part of this consensus and the new hike is bound to make him inconsolable, as he seems to have borne the brunt of what may be described as endless shenanigans in Nigeria’s power sector.

    One year after the Federal Government divested substantially and privatized its interest in the power sector, situations have regressed in all the value chains of generation, transmission and distribution. While both the generation and distribution arms have been divested to private investors, transmission remains with the government under a lease management arrangement. Though this fundamental restructuring of the system was meant to engender market competitiveness and efficiency, the reverse has been the case.

    Power generation target was set at 6000 mega watts (mw) at the beginning of the year. By August it was scaled down to 5000mw and now, as the year ends in a few days, even that will not be met. Only 3,750mw is being generated currently and NERC will base its retail tariff for the next six months effective December 1, 2014 on this quantum of generation. But the peak demand for power in the country now is estimated at 12,800mw.

    Ironically, Transmission Company of Nigeria, (TCN) the firm solely responsible for this leg of the chain still does not have capacity to transmit even this meager 3,750mw. It is said that about 80mw of currently generated power still gets ‘stranded’ for lack of transmission capacity.

    Distribution is another sordid tale of lack of commitment by the new owners to make fresh investment; refusal to upgrade to pre-paid meters and endless agitation for tariff increase.

    The result is that so far, the privatization of Nigeria’s power sector has been a debacle with the consumer caught in a most insouciant matrix of the Federal Government and its cronies.

    It is most unconscionable that government seems to be playing games with what is probably the most important infrastructure for growth and development. Since the era of former President Olusegun Obasanjo, it seems that the more funds sunk into the quest for electricity, the more it seems to require. Recently, N213 billion cheap fund was approved for these privatized firms by the government. Why would government throw taxpayers’ money to investors who have not shown any cause that they need such aid?

    We aver that government should retrace its steps and approach its power reform programme with a modicum of transparency and accountability.   Lest, we are in for a long night — and there is a limit to the extortion the people can bear.

  • Fed Govt misses 5,000mw target

    Fed Govt misses 5,000mw target

    The Federal Government may have failed to meet its target of generating 5,000mw of electricity by year end.

    Barely 37 days to end the year, the government is generating only 3,750.73megawatts.

    It is unable to fully distribute all of it as 79mw is “stranded”. Reason? The Transmission Company of Nigeria (TCN) cannot wheel it to the energy distribution companies.

    The Federal Government on August 2 reduced its former target of producing 6,000MW by December to 5,000MW. It also announced an increase in gas prices.

    Minister of Petroleum Resources Mrs. Diezani Alison-Madueke, who announced the target, also noted that the Central Bank of Nigeria (CBN) would pay the N25 billion owed to gas suppliers.

    Figures from the Federal Ministry of Power as at November 19 were a far cry from the target.

    The ministry noted that of  the  3,750.73MW generated , 79MW was “stranded”.

    Following the statistics, the peak power generation in the electricity market as at November 19 was 3,958.1 MW. Peak demand forecast was 12,800MW.

    The data also maintained that the highest peak power generation ever recorded by the Nigeria Electricity Supply Industry is 4,517.6 MW on December 23, 2013.

    The TCN, which evacuates power from the generation company to the distribution companies, seems to have maintained less than 3,700MW capacity, although it claims to have 6,000MW capacity.

    The TCN also has a target of 10,000MW for this year.

    The Nigerian Electricity Regulatory Commission (NERC)  last week announced that electricity tariff would rise by December 1. The announcement  has unsettled many consumers because power supply is abysmal.

    Reacting to the announcement, the Publicity Secretary of the Conference of Nigerian Political Parties (CNPP), Mr. Osita Okechukwu, said: “The NERC, like an agency under a corrupt system, is covered by the law, which was abinitio tailored to suit the tenant instead of the children of the landlord.”

    He raised questions whether the commission will ever approve a drop in electricity. “Otherwise, why is it that we will never experience down sizing of the tarrif, but upward review, regardless of poor electricity supply?

    “Today, it is being jacked up because of the increase in the international price of gas and tomorrow another reason for increase like rate of inflation will be adduced as the reason for upward review of the tariff,” Okechukwu said, adding:

    “It is a vicious crisis and theatre of absurd symptomatic of an economy, whose managers are either in self-denial or deliberately out to short change the citizenry.

    “In sum, how do we explain that penultimate week N213 billion was pumped into this drain from public fund and the same citizenry that own the state owned enterprise privatised are not only being taxed, but cannot point to any project the money realised from the sale was used for.”

    The Nigeria Labour Congress (NLC) and the Conference of Nigeria Political Parties (CNPP) also yesterday rejected further increase in electricity tariff in the face of low power supply.

    Speaking with The Nation on telephone, the congress’ Information Officer, Comrade Benson Upah, said: “At the moment, there is no correlation between tariff paid by the consumers and the services rendered.”

    He maintained that a tariff hike is unacceptable.

    “So, it is inconceivable and totally unacceptable for them (NERC) to contemplate an increase in tariff,” Upah said.

  • Electricity tariff ‘ll go up Dec 1, says NERC

    Electricity tariff ‘ll go up Dec 1, says NERC

    In spite of the erratic power supply situation in the country, the Nigerian Electricity Regulatory Commission (NERC) yesterday said it will increase electricity tariff with effect from December 1  this year.

    It blamed data collected from the Central Bank of Nigeria (CBN) and the National Beurea of Statistics (NBS) which showed inflation rate, gas price and falling exchange rate for the inevitability of its decision.

    NERC said throughout the period from  December 1 this year to May, 31 next year, the retail tariff will be based on the generation of 3,676megawatts (Mw) of electricity.

    Its Tariff and Rates chief, Roland Achor, who spoke  in Abuja at a meeting with Electricity Industry Stakeholders on the Bi-Annual Minor Review of Multi Year Tariff Order (MYTO-2), said tariff increase has become imperative in view of the prevailing circumstances.

    He said: “So the last available deduction capacity that we used was 3,424Mw, throughout the period from Dec 1 to  May 31, 2015 retail tariff will be based on the generation of 3,675Mw. That is what we are going to use to come out with the new tariff.

    “The effective foreign exchange to $1 is N156.29k. Recently, the commission with BPE (Bureau of Public Enterprises) in collaboration with the Ministry of Petroleum Resources have agreed on a new bench mark commencing Dec 1 and the new price is $2.50 and a transportation cost of 80 cent effective  Dec 1.

    “The exchange rate takes care of foreign exchange risks in the power sector. The equipment required are always foreign denominated, so we allow the foreign exchange rates to take care of the risks. From the data we received from CBN, it shows that the foreign exchange rate as at Sep. 2014 is N154.75 to $1 while the exchange rate as at last year was N158.57 and if you look at our model, we bench marked it at N178 to $1.”

    According to him, it is important to note that the commission allowed one per cent above the CBN rate to cover for letters of credit and other bank charges. He said,  currently, if the one per cent which is the premium is added, the new foreign exchange rate to $1 is N156.29 commencing Dec 1, 2015.

    He said: “It should be noted that the minor review we did in May was at $1.8 for both pricing and transportation. “Before 2012, there where only three standard tripod that was used for the manual review which was inflation, exchange rate and gas price.

    “It was projected that by 2008 we were supposed to generate 4000Mw, in 2009, 6000Mw, 2010, 1000Mw and 2011 16,000Mw it was gathered that all of these projections ended in fiasco.

    “Based on information we got from the system operations department, it shows that on a six months average ending  Sep 30, 2015, the total division (sic) capacity was 3,675.41 Mw, the gross capacity estimated was to be 5,556 Mw.

    “The inflation rate compensate for the rising cost of doing business, it equally allows investors pay their staff living wages.