The Nigerian Electricity Regulatory Commission (NERC) has approved an increase in electricity tariff nationwide.

The new tariff takes effect from January 1, 2021, according to a directive signed by NERC Chairman Sanusi Garba.

The new hike is by 50 percent.

NERC states that the new tariff will be enforced until the issuance of another minor review order or an extraordinary tariff review order by the commission.

Some of the indices considered for the upward review include inflation rate, exchange rate, US rate of inflation, available generation capacity, gas price, MDA losses and capex adjustment, the NERC statement adds.

Second increase in two months

In the new Order NERC/225/2020, the commission said it considered the 14.9% inflation rate rise in November 2020, foreign exchange of N379.4/$1 as of December 29, 2020, available generation capacity, US inflation rate of 1.22% and the Capital Expenditure (CAPEX) of the power firms to raise the tariff.

The revised Service-Based Tariff (SBT) also saw an increase in the rates payable by all classes of electricity users unlike the one of November 2020 which exempted low power getters.

Increase in electricity tariff was a contentious issue in 2020.

The national assembly had asked NERC to suspend the increase at the time due to the economic impact of the COVID-19 pandemic on the populace. However, there was an increase in tariff afterwards.

This would be the second electricity tariff hike within two months. The last hike rolled into effect in November.

Electricity companies maintain that only a cost reflective tariff in the electricity sector would guarantee regular power supply to homes and businesses.