“Magodo GRA Phase 2 residents have been enjoying N72.40/kWh electricity tariff rates” -Source

Oredola Adeola

The Ikeja Electric (IE) has notified the Magodo Resident Association (Magodo GRA Phase 2) of its intention to suspend the existing Bilateral Power Purchase Agreement (PPA) effective from July 15, 2024, after nearly two years of operation.

Folake Soetan, CEO of Ikeja Electric, communicated this decision in document IE/REG/CUS/24/01, dated July 2024 and obtained by Advisors Reports on Monday.

Advisors Reports gathered that the PPA, which commenced on September 15, 2022, is being suspended due to significant developments in the electricity market and regulatory framework.

Key factors influencing this decision according to the IE CEO include the January 2024 Multi-Year Tariff Order (MYTO), subsequent Supplementary MYTO Orders from April 2024, and challenges related to non-cost reflective pricing for Ikeja Electric’s bespoke bilateral services.

Soetan further emphasized that these changes necessitate a review of the sustainability of Ikeja Electric’s bilateral services under the PPA.

She said, “This will enable Ikeja Electric to review the sustainability of its bilateral services and further engage the Estate and or its representatives on the modalities for continued bilateral services.”

Despite the suspension, Ikeja Electric reassured the Estate of its ongoing commitment to ensuring a reliable and sustainable power supply for its members.

Advisors Reports have learned that despite the recent tariff increase for Band A feeders by the Nigerian Electricity Regulatory Commission (NERC), residents of Magodo GRA Phase 2 continue to benefit from uninterrupted power supply at a discounted rate through their Bilateral Power Purchase Agreement (PPA) with Ikeja Electric.

Initiated in September 2022 at a rate of N50 per kilowatt hour, the PPA has since been adjusted upwards to N72.40/kWh, providing Magodo residents with a minimum of 20 hours of electricity daily.

The Advisors Report confirmed that this rate stands in stark contrast to the new Band A tariff of N206/kWh introduced by NERC in its 2024 Supplementary Order.