Nigeria power rates to rise up to 88%

FT

13 February 2012

Nigeria power rates to rise up to 88%

Electricity tariffs in Nigeria will increase up to 88 per cent under reforms designed to revive the power sector and attract outside investors.

The proposed new rates, seen by the Financial Times, will be announced in the coming weeks, before the privatisation of 18 state-run power generation, distribution and transmission companies this year.

But the move is likely to cause controversy, coming just a month after the removal of fuel subsidies, which caused petrol prices to more than double. The price increase prompted street protests and a weeklong nationwide strike, forcing Goodluck Jonathan’s administration partly to backtrack.

Nigeria’s government said the higher “cost-reflective tariffs” for residential and commercial electricity customers were necessary to ensure that investors could make a profit.

Under the new pricing regime, due to become effective in April, tariffs will rise 25-88 per cent, though most customer classes will see a 50 per cent increase in their bills. The government hopes that cushioning the blow for the poorest consumers – a policy absent during the fuel subsidy removal – will ensure that there is no repeat of the public outcry.