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After Meeting with Labour Unions, Nigeria Agrees To Cut Electricity Tariffs

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Nigeria has reached an agreement with its main labour unions to provide a tariff relief of N10.20 per kilowatt hour for Nigerians for the next three months and to distribute six million free meters to consumers.

In a communique made available to journalists after a lengthy meeting between Labour and the Federal Government on Sunday evening, it was disclosed that they adopted a two-phase approach to proffer solutions which would help resolve issues affecting the electricity sector in the medium term, whilst providing relief to customers immediately.

The immediate relief would be provided to citizens for a 2 to 3-month period (which will not exceed December 31, 2020), and will be the timeline for the conclusion of an extended scope of work for the Technical Committee.

According to the communique: “Following extensive analyses, it was realised that VAT proceeds from the Nigeria Electricity Supply Industry (NESI) could be used to secure varying levels of reflief in customer tariffs across bands A, B and C, ensuring that all customers receive some form of relief during this difficult time.

“Cumulatively the per kWh relief that will be provided to customers in bands A, B and C is N10.20 per kilowatt hour (kWh), which will be distributed across the bands. The relief will be in place for the 2 to 3-month period required for the Technical Committee to conclude its extended scope of work. It should be noted that Bands D and E tariffs were not changed, and this freeze will remain in place.”

The government agreed that the National Mass Metering Programme (NMMP) will be accelerated. “This programme will distribute 6 million meters to Nigerians free, off charge. The Central Bank of Nigeria (CBN) having approved the funding for this programme, the meters will be distributed to consumers immediately using stockpiles in country and local assemblers. The cost of meters shall be recovered from the DISCOs.

“The 6 million meters to be procured for the NMMP will only be through local meter manufacturers and assemblers. This will create jobs and a new meter manufacturing sub-sector in the country.”

The government agreed to provide proper salary protection for electricity workers. In implementing payment discipline measures for the DISCOs, the government will ensure the protection of the salary for electricity workers, which will be protected in the revised payment waterfall structure for the NESI.

“In order to protect customers from changes in tariff during the 2-3 month period of review by the Joint Technical Committee, DISCOs will be directed to temporarily suspend customer band migration. This means that while DISCOs are expected to fulfil their Performance Improvement Plans (PIP) thereby improving the quality of service to customers, no added charges will be passed on to customers during this period. This measure is aimed at building confidence in the Service Based Tariff structure.”

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