The Nigerian Electricity Regulatory Commission (NERC) has pulled the brakes in the implementation of the hike in electricity tariffs.
In what appeared to be a response to public outcry, the regulator said: “In the next three months, we will engage you (public) for consultations.
“We have given the report card of what we saw based on all indices for doing the review. We did not say it (hike) is binding tomorrow morning. We said we are going to the second thing: consultation,” a statement by its chairman Prof. James Momoh.
Momoh and the NERC Secretary, Dafe Akpaneye, in a directive on December 31, gave approval to 11 electricity Distribution Companies (DisCos) to increase tariffs for different categories of consumers, excluding residential, with effect from April 11.
Under the proposed tariff regime,, the Abuja DisCo will charge N47.09 per unit instead of N27.20.
The Ikeja DisCo in Lagos State, N36.92 as against N26.50 while Enugu DisCo ‘s tariff was to hit N48.12 from N25.11.
The NERC said the new rates will enable DisCos to generate enough revenue to pay cost of power production by all the segments of the power supply value chain, including gas producers/suppliers.
But on Monday, Momoh backslided on the December 31 order, saying the upward review in NERC’s Multi-Year Tariff (MYTO) was not with immediate effect.
He told reporters at NERC’s pre-conference press briefing on the 11th edition of the International Conference on Energy, Power Systems Operations and Planning (ICEPSOP) in Abuja, that the latest position “supersedes other orders issued on the subject matter. “
The regulatory agency’s chairman said, “The Federal Government’s updated Power Sector Recovery Program does not envisage an immediate increase in end -user tariffs until 1st April 2020 and a transition to full cost reflectivity by end of 2021.
“In the interim, the Federal Government has committed to fund the revenue gap arising from the difference between cost reflective tariffs determined by the commission and the actual end-user tariffs payable by customers in line. So, there is no immediate increase in tariff s for customer.
“The proposed tariff review is what we are mandated to do as a regulator. We did the first one around June. January is here and we have done it. We have no option than to do our jobs. We have done the review and it is subject to public consultation.
”In the next three months, we will engage the public for consultations. We have given the report card of what we saw based on all indices for doing the review. We did not say it is binding tomorrow morning. We said we are going to the second thing: consultation.
“The (December 31) order was simply a communication of what we have done as a regulator looking at what it takes to increase or decrease tariff. If at the end of our meeting back and front, we say increase, then there will be an increase. If we say no increase, there will be no increase.
“It is going to be based on our engagement at the public forum. We are going issue a press statement for one more time on what this document (the order) means in a layman language.
“That is the one you(journalists) will all work on. No increase of tariff . We are not leaving any stone on turned. We don’t want any increase without negotiations with customers .
“I am a customer too. As customers, we will pay our bills. But if you suddenly change it, I need to know why. It must be for the good of everybody. Don’t forget, service must improve.”
Momoh, who also spoke on metering and estimated billing, said in the next few months , a ceiling would be placed on the amount a DisCo should charge a customers who has no meter or has a faulty one.
His words: “Our mind is solidly on making sure that Nigerians are provided electricity and that Nigerians are metered . . We will do everything to ensure that DisCos provide customers with meters.
”We have a back up plan that will be out in the next few months if they(DisCos) fail to do so . It will state the maximum amount a DisCo can charge customers they have not been able to provide meters.”
Before Momoh made the clarification, Nigerian Labour Congress (NLC), and the National Chairperson of the Joint National Public Service Negotiating Council disagreed with the Nigeria Employers’ Consultative Association (NECA) on the proposed electricity tariff increase.
While the NLC and the JNPSNC described it as counter-productive, NECA argued that it would help get the power sector back on track.
President of the NLC, Ayuba Wabba, said no industry can survive with the new tariff, adding that the cost of doing business in Nigeria would go up by 70 per cent.
Wabba said with the proposed tariff regime, Nigeria would be among the countries with the highest cost of electricity per unit.
He said, “The issue of hike in the electricity tariff will be counter- productive and we reject it. When they had a meeting with the consumers, they never talk about hike in electricity, so why now.
“No industry can survive on such tariff. I just spoke with one of the industrialists and he told me that cost of production will increase by 70 per cent. So, labour rejects it in totality.”
Also, National Chairperson of the JNPSNC, Abdulrafiu Adeniji, wondered why the Federal Government rushed to increase electricity tariffs when the new minimum wage had not been fully implemented throughout the country.
Adeniji said, ”If the new tariff policy is eventually implemented throughout Nigeria, it is not only targeted at labour, it is a daylight robbery .
“We are all aware how epileptic the electricity supply is in the country. We have yet to get value for the money Nigerians pay for electricity . Why increase tariffs when the supply is not stable or consistent?
“Government does things before thinking of their implications, otherwise, there is no basis for the increase in electricity tariffs for now.
“If you give us the minimum wage that has yet to be implemented across board and you are increasing electricity tariff that will be implement across Nigeria, irrespective of the poor supply, this is an unexpected added burden on Nigerians.”
But NECA feels otherwise. It said even though, the increase would have some adverse effect on companies and people, it was for now, a necessity.
Its Director-General, Dr. Timothy Olawale, in a brief interview with The Nation said “while customers have said tariff review should only take place after there has been improvement in service, service providers have said for service to improve, the right amount has to be paid.
“The argument has always been the chicken and egg argument, a cyclical one. Putting the matter in context therefore, the issue of the increase is intended to enable the sector realise what can be described as right price for the product. It is with this right that more investment can be attracted and consequently, improved service.”
In another interview with the News Agency of Nigeria,Olawale urged the DisCos to justify the proposed tariff hike since, “ consumers and businesses were not opposed to paying appropriate price for electricity consumed.”
According to him, the major contention has been estimated and sometimes outrageous billing for power not consumed, with implication on cost of living and cost of doing business without a guarantee of commensurate improvement in quality of service.
“The DisCos would do well to fast-track the provision of prepaid metres, the GenCos should ensure availability of power for the DisCos to distribute and government should support the DisCos to curb the rampant incidences of electricity theft across the nation,” he advised..
Olawale urged NERC to live up to its responsibility and ensure strict adherence to the regulations.
He said, “We note the political consideration that goes into the issue of appropriate pricing and the timing of same because of the multiplier effect of hike on the society.
“We, however, urge that the larger interest of the nation should guide all stakeholders to enable Nigerians and the business community to enjoy 24 hours uninterrupted power supply they crave for.”
However, the House of Representatives has assured Nigerians that it would look into the proposed hike on resumption from break.
The House Spokesman, Emmanuel Kalu, in an interview with The Nation, said, ”The Federal Government has stated that the increase is meant to enable power distribution licensees to operate efficiently to recover the full costs of their activities, including reasonable returns on the capital invested in the business.
“However, the House will certainly look into the price hike and its possible effects (good or bad) on the end users once it reconvenes, since it is an issue that affects every Nigerian.
“The House is also aware that the price hike originally expected to take effect from April 2020, now takes effect from Jan. 1, 2020.
“Nigerians think it is too sudden and so the House will also consider the possibility of extending the notice period to allow Nigerians adequately prepare for the increase..” (The Nation)
