Aba Power Limited Electric (APLE) has submitted an application to the Nigerian Electricity Regulatory Commission (NERC) seeking a massive 123.33% increase in electricity tariffs, set to take effect from January 1, 2025.
If approved, the increase will affect customers in Aba’s franchise area, causing a sharp rise in their electricity bills. The company argues that this hike is necessary due to rising inflation, a high exchange rate, and soaring operational costs.
The proposed tariff increase will see electricity charges for non-maximum demand customers in Band-A rise from N99.9 per kilowatt-hour (kWh) to N223.12/kWh. Meanwhile, maximum demand customers in Band-A will face an increase from N107.5/kWh to N240.09/kWh. Customers in Band MD2 will also see a jump in their electricity rates, from N109.79/kWh to N245.2/kWh.
The proposal comes at a time when consumers in Nigeria are already facing significant challenges due to inflation and a volatile exchange rate. If the application is approved, customers in Aba will be paying N35.7 more per kWh than consumers in other parts of Nigeria.
At a public hearing organized by NERC in Abuja on Tuesday, the company defended its request, explaining that it had not benefitted from a minor tariff increase approved by the Commission for other distribution companies in December 2022.
APLE’s Managing Director, Mr. Ugo Opiegbe, explained that the price hike was essential for improving the power supply to the people of Aba. “This increase will ensure a more stable and reliable power supply for our customers,” he stated during the hearing.
In addition to blaming inflation, the company’s financial parameters for the hike were also revealed at the hearing. The company cited a 25% inflation rate, an exchange rate of N1,654.2 per dollar, an average energy offtake cost of N135 per kWh, and an annual operational expense of N189.6 billion as the main reasons for the tariff increase.
“We expect our revenue to hit N227 billion in 2025,” Opiegbe added, emphasizing the need for this increase to meet the company’s operational needs. Aba Power plans to source most of its power from the Aba Independent Power Plant, owned by Geometric Power, with additional supply coming from the Alaoji Power Plant, owned by the Niger Delta Power Holding Company (NDPHC).
The public hearing also saw a strong response from NERC’s Vice Chairman, Musiliu Oseni, who assured the audience that the Commission would thoroughly review the application before making any decision.
“We will consider all the factors affecting the industry, including the presentations made during the hearing. We understand that improving services for consumers is critical. When your customers are happy, they will be willing to pay more, so that you can improve your services,” Oseni said. He also pointed out the importance of assessing the potential consequences of this hike on consumers before allowing the tariff adjustment to take place.
The proposal has sparked concern among residents of Aba, with many fearing that the dramatic increase will place an even greater strain on their already struggling finances. With inflation running high and the cost of living increasing across Nigeria, the idea of a 123% electricity tariff hike has not been welcomed by all.
“I can barely afford my bills as it is,” said Nkechi, a small business owner in Aba. “A hike like this could force me to shut down. I don’t see how this will help improve the power supply when we already face so many issues.”
However, Aba Power remains firm in its stance, arguing that the increase is necessary for the long-term benefit of its customers. The company has committed to ensuring a stable power supply, which it believes will ultimately benefit the city’s residents by reducing the frequency of blackouts and power interruptions.
As the NERC deliberates on this controversial application, it will have to balance the needs of the power sector with the impact on consumers, especially in a time of economic hardship.
“We need to look critically at the possible effects of this increase,” Oseni remarked during the hearing. “Before we allow the cost to be passed on to the end users, we will have to consider the problems it might cause, and whether or not it will lead to better services in the long run.”
The final decision on the tariff increase is expected in the coming weeks, with many Nigerians anxiously awaiting NERC’s verdict on this unprecedented proposal.
For now, all eyes remain on NERC as the regulator faces the challenging task of navigating the delicate balance between improving Nigeria’s electricity infrastructure and protecting consumers from further economic hardship.
If approved, the tariff hike could set a worrying precedent for other electricity distribution companies in the country, leaving Nigerians to wonder just how far the rising cost of living will go.
