The Federal Government has pledged to cover the revenue shortfall created by the difference between cost-reflective tariffs and the actual rates paid by customers of the Kano Electricity Distribution Company (KEDCO). This commitment was outlined in a September 2024 Supplementary Order issued by the Nigerian Electricity Regulatory Commission (NERC) as part of the Multi-Year Tariff Order (MYTO) framework for KEDCO.
The supplementary order, which took effect on September 1, 2024, aims to address financial disparities resulting from factors like exchange rate volatility and inflation. NERC noted that key metrics such as the naira-to-dollar exchange rate, Nigeria’s inflation rate, and U.S. inflation rate were reviewed to adjust KEDCO’s revenue and tariff requirements for the remainder of the year. The Federal Government’s intervention is intended to help KEDCO meet its financial obligations amid rising costs.
The order also outlined KEDCO’s responsibilities to its customers under the Service-Based Tariff (SBT) framework, which guarantees specific hours of electricity supply depending on the tariff band. NERC stressed that KEDCO would be held accountable for meeting these service delivery commitments.
In addition, KEDCO has been directed to enhance its infrastructure, including the acquisition of embedded generation capacity. Notably, at least 50% of this capacity must come from renewable energy sources.
The Federal Government’s financial backing during this period is intended to stabilize the electricity market and protect consumers from the full impact of cost-reflective tariffs. This support will enable KEDCO to maintain essential services while fulfilling its market payment responsibilities.
NERC concluded by reaffirming its commitment to closely monitor KEDCO’s adherence to its service obligations.
