Elec­tric­ity tar­iff hike: Pay­ing more for dark­ness

The Punch - - VIEWPOINT - Jide Ojo

“The tar­iffs shall re­main the same as they presently are (i.e. 2015 lev­els) un­til April 1, 2020 when there will be a slight in­cre­ment to cater for tar­iff short­falls which shall be grad­u­ally passed on to the con­sumer un­til this is fully com­pleted by the end of 2021.”

–Sun­day Odun­tan, spokesper­son for As­so­ci­a­tion of Nige­rian Elec­tric­ity Distrib­u­tors

The knotty is­sue of elec­tric­ity tar­iff has once again reared its ugly head so early in the new year. The Nige­rian Elec­tric­ity Reg­u­la­tory Com­mis­sion on Satur­day, Jan­uary 4, 2020 an­nounced the im­me­di­ate re­view of elec­tric­ity tar­iffs in the coun­try from Jan­uary 1. The or­der was is­sued to the 11 elec­tric­ity dis­tri­bu­tion com­pa­nies on De­cem­ber 31, 2019, but pub­lished on the com­mis­sion’s website last Satur­day. Signed jointly by the Chair­man of the Com­mis­sion, Joseph Mo­moh, and the Com­mis­sioner for Le­gal, Li­cence & Com­pli­ance, Dafe Akpen­eye, the or­der was ti­tled, “De­cem­ber 2019 MYTO Mi­nor Re­view Or­der”, for the 11 Dis­cos.

The var­i­ous tar­iff re­views for all cat­e­gories of con­sumers - ex­cept those con­sumers clas­si­fied as res­i­den­tial (R1) - ranged from 59.7 per cent for con­sumers in Ikeja to 77.6 per cent in Enugu. Un­der the new or­der, elec­tric­ity con­sumers in Ikeja who used to pay about N13.34 per kwh since un­der the 2015 MYTO, when the last re­view was car­ried out, will from Jan­uary 1 this year pay N21.80 per kwh, the same as their R2 coun­ter­parts. Their coun­ter­parts in Enugu, who used to pay about N17.42 per kwh, will, un­der the new or­der, pay about N30.93 kwh from Jan­uary 1. Their R2 and R3 coun­ter­parts who paid about N19.31 and N27.11 per kwh since 2015, will now be pay­ing N34.28 and N48.12 per kwh. Res­i­den­tial (R2) and R3 con­sumers in Ikeja, who have been pay­ing N13.34 and N26.5 per kwh since 2015, will now pay N21.30 and N21.80 per kwh. Res­i­den­tial con­sumers are those cat­e­gorised as those us­ing singe phase and three-phase me­ters and elec­tric­ity con­sump­tion of about 50 kwh on premises with flats ex­clu­sively for res­i­den­tial pur­poses.

Since this news broke over the week­end, a lot of dust has been raised by dif­fer­ent seg­ments of so­ci­ety. The Nige­rian labour unions ex­pect­edly con­demned the in­crease say­ing that the Fed­eral Gov­ern­ment was tak­ing back the new min­i­mum wage re­cently ap­proved for work­ers for which many of them in the states had yet to en­joy. More so, com­ing on the heels of the re­cent in­crease in the Value Added Tax from five per cent to 7.5 per cent. On Tues­day, Jan­uary 8, 2020, I was a guest an­a­lyst on “Burgami”, a magazine pro­gramme of Vi­sion 92.1 FM as well as “Nige­ria Today” on NTA News 24 where the is­sue was the topic of dis­cus­sion. Be­fore I delve

MY four years as an un­der­grad­u­ate at the Univer­sity of La­gos wit­nessed what I can de­scribe as an an­nual mess which, I dare say, is pe­cu­liar to my great alma mater. Un­for­tu­nately, this messy sit­u­a­tion still con­tin­ues years af­ter I have grad­u­ated from the in­sti­tu­tion. The “pe­cu­liar mess” is the event known as bed-space bal­lot­ing. Are you sur­prised that I called it an event?

Un­like sev­eral in­sti­tu­tions of higher learn­ing in Nige­ria and beyond where peo­ple who are not stu­dents of such in­sti­tu­tions rarely hear of when or how stu­dents are al­lo­cated ac­com­mo­da­tion, UNILAG’S bed-space al­lo­ca­tion is like a big an­nual event that is known by ev­ery­one who has a friend, child or ward in the in­sti­tu­tion. This wide­spread knowl­edge is ow­ing to the dif­fi­cul­ties and hitches that AL­WAYS come with the ex­er­cise. Be­ing aware of the at­ten­dant dif­fi­cul­ties of the ex­er­cise, the Dean of Stu­dent Af­fairs would al­ways send a no­tice to stu­dents, an­nounc­ing the days of the ex­er­cise and en­cour­ag­ing them to be ready for the stren­u­ous process. Fac­ulty stu­dent as­so­ci­a­tions also cor­rob­o­rate the DSA’S no­ti­fi­ca­tion and ask stu­dents to “get their gad­gets ready” for the bal­lot­ing (more like ask­ing sol­diers to get their weapons ready for war), and such mes­sages are usu­ally con­cluded with, “We wish you best of luck”. Best of luck be­cause of ac­com­mo­da­tion? I think that is bizarre!

Akokites, as stu­dents of UNILAG are fondly called, al­ways wel­come the bed-space bal­lot­ing days with anx­i­ety, fear and un­cer­tainty. At least 24 hours be­fore the “D-day”, an av­er­age Akokite would have con­tacted friends, par­ents and re­la­tions across Nige­ria, and even in the Di­as­pora, to help them bal­lot for bed space on the days of the ex­er­cise. The stu­dents them­selves would be up both in the night into my opin­ion on the new tar­iff regime, let me high­light some of the de­fences be­ing put for­ward by the op­er­a­tors and the reg­u­la­tor of the Nige­rian power sec­tor.

To me, the chair­man of NERC, Prof. Joseph Mo­moh, was be­ing clever by half when he said there was no hike in the elec­tric­ity tar­iff. hear him, “We wish to pro­vide guid­ance that the mi­nor re­view im­ple­mented by the com­mis­sion was a ret­ro­spec­tive ad­just­ment of the tar­iff regime re­leased in 2015 to ac­count for changes in macroe­co­nomic in­dices for the years 2016, 2017 and 2018 thus pro­vid­ing cer­tainty about rev­enue short­fall that may have arisen due to the dif­fer­en­tial be­tween tar­iffs ap­proved by the reg­u­la­tor and ac­tual end-user tar­iffs”. he went on to say, “The com­mis­sion there­fore wishes to no­tify the gen­eral pub­lic that no tar­iff in­crease has been ap­proved by the com­mis­sion vide the or­der.”

The spokesper­son for the As­so­ci­a­tion of Nige­rian Elec­tric­ity Distrib­u­tors, Sun­day Odun­tan, quoted in the open­ing para­graph, last Mon­day, how­ever had this to say. “In view of the fore­go­ing, we state em­phat­i­cally that there shall be no change or in­crease in the ex­ist­ing elec­tric­ity tar­iff un­til April 1 when the new ad­justed tar­iffs shall be­gin to grad­u­ally re­flect the dy­namism of our macroe­con­omy.” he said NERC was em­pow­ered by the Elec­tric Power Sec­tor Re­form Act to carry out mi­nor re­views of the Multi-year Tar­iff Or­der 2015 twice a year and that an ac­cu­rate elec­tric­ity tar­iff as­sisted in en­sur­ing ef­fi­cient power sup­ply de­liv­ery from gen­er­a­tion through trans­mis­sion to dis­tri­bu­tion. In ad­di­tion, he opined that ac­cu­rate tar­iffs as­sure stake­hold­ers and par­tic­i­pants of their costs re­cov­ery and Re­turn on In­vest­ment and make the busi­ness vi­able.

I find it a wrong-headed ap­proach to first ap­prove an in­crease in tar­iffs be­fore the na­tion­wide con­sul­ta­tion that the NERC chair­man is pledg­ing to em­bark on in the next three months. Again, I dis­agree with the use of mi­nor ad­just­ment for a 78 per cent in­crease in tar­iff. That is a mas­sive in­crease and is com­pletely at vari­ance with the mi­nor re­view en­vis­aged by the Elec­tric Power Sec­tor Re­form. Fur­ther­more, if the EPSR Act asks NERC to carry out mi­nor re­views of the Multi-year Tar­iff Or­der 2015 twice a year, why do­ing a three­year re­view in one fell swoop? Can the dis­tri­bu­tion com­pa­nies and their reg­u­la­tor, NERC, jus­tify this hike in good con­science?

For clar­ity pur­poses, I am not against pay­ing more for a ser­vice be­ing en­joyed. how­ever, over the decades, from the time of the Elec­tric­ity Com­pany of Nige­ria to the Na­tional Elec­tric Power Au­thor­ity to Power hold­ing Com­pany of Nige­ria down to this era of pri­vati­sa­tion when we now have the tri­umvi­rate of power gen­er­a­tion, trans­mis­sion and dis­tri­bu­tion com­pa­nies, elec­tric­ity has re­mained epilep­tic all over the coun­try with ques­tions be­ing asked about the bil­lions of dol­lars sunk into the var­i­ous power projects with­out any­thing sig­nif­i­cant to show as value for the huge funds in­vested in the sec­tor.

I think there should have been con­sid­er­able im­prove­ment in the sup­ply of elec­tric­ity be­fore this hike would be ap­proved for the DIS­COS. Also, the knotty is­sue of me­ter­ing of con­sumers has not been ef­fec­tively tack­led. About 70 per cent of elec­tric­ity con­sumers are still be­ing sub­jected to es­ti­mated billing. This is un­ac­cept­able! What was ini­tially pledged were free me­ters for con­sumers, later we were asked to pay for the me­ters while the cost of pur­chase would be used to get elec­tric­ity in re­turn. It was named CAPMI. In­for­ma­tion gar­nered from the website of NERC has this to say, “The Nige­rian Elec­tric­ity Reg­u­la­tory Com­mis­sion as part of the strat­egy of fast-track­ing the roll-out of end-user me­ters had, in the year 2013, in­tro­duced the Cred­ited Ad­vanced Pay­ment for Me­ter­ing Im­ple­men­ta­tion scheme. Fol­low­ing the re­cur­ring cus­tomer com­plaints about non-de­liv­ery of me­ters de­spite full pay­ment by cus­tomers, the ini­tia­tive was wound down with ef­fect from Novem­ber 1, 2016. How­ever, re­ports avail­able with the Com­mis­sion in­di­cate that many cus­tomers who have paid for me­ters un­der CAPMI have to date re­mained un­metered with­out any sat­is­fac­tory jus­ti­fi­ca­tion by the dis­tri­bu­tion com­pa­nies.” Imag­ine that!

Now, they have come up with MAP. MAP means Me­ter As­set Provider. This is an in­de­pen­dent third party granted a per­mit by NERC to pro­vide me­ter­ing ser­vices which may in­clude me­ter fi­nanc­ing, pro­cure­ment, sup­ply, in­stal­la­tion, main­te­nance and re­place­ment. In line with the new me­ter­ing reg­u­la­tion, Me­ter As­set Providers are go­ing to be pri­mar­ily re­spon­si­ble for pro­vid­ing me­ter­ing ser­vices, which had been solely pro­vided by the Dis­cos up till now. De­spite this new ar­range­ment, the me­ter­ing gap is still very huge with many con­sumers who had paid for me­ters yet to be supplied.

Isn’t it pos­si­ble for in­di­vid­u­als and com­pa­nies to buy their me­ters in the open mar­ket just as we pur­chase mo­bile tele­phones while the telecom­mu­ni­ca­tion com­pa­nies pro­vide the ac­ti­va­tion and recharge cards? Why should DIS­COS be the mid­dle­men be­tween the me­ter man­u­fac­tur­ers and elec­tric­ity con­sumers?

Be­fore the April 1 due date for the im­ple­men­ta­tion of the new elec­tric­ity tar­iff, I’ll like to see the fol­low­ing: Sig­nif­i­cant bridging of the huge me­ter­ing gap; im­proved elec­tric­ity sup­ply to con­sumers; prompt trou­ble-shoot­ing and at­ten­tion to com­plaints of con­sumers; and wide civic ed­u­ca­tion on the rights of elec­tric­ity con­sumers. The Fed­eral Gov­ern­ment should also carry out in­de­pen­dent foren­sic au­dits of all the power gen­er­a­tion, trans­mis­sion and dis­tri­bu­tion com­pa­nies in or­der to as­cer­tain their sol­vency and tech­ni­cal ca­pac­i­ties. The funds that these com­pa­nies promised to in­ject into the sec­tor never got in and gov­ern­ment needs to know why they have been un­der­per­form­ing. The Fed­eral Gov­ern­ment should also pay all the out­stand­ing debts owed by its Min­istries, Depart­ment and Agen­cies while in­di­vid­u­als should also strive to pay their gen­uine debts while es­chew­ing elec­tric­ity thefts.

Fol­low me on Twit­ter @jideo­jong

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