The Punch

Electricit­y tariff hike: Paying more for darkness

- 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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