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Poor Power Supply And Tariff Hike



Over the years, the recurring poor power supply in the country has often attracted heated debate among Nigerians. But what seems to be more disturbing to the people is the incessant hike in electricity tariff that are not commensurate with the quality of service provided by the electricity companies.

Again, going by the recent tariff increase approved by the federal government which takes effect next year, consumers will have to pay an additional sum of between N8 and N14 for every kilowatt-hour of energy. This means that consumers will pay about N1.52 trillion for power next year. This is about N600 billion higher than the estimated N900 billion which the electricity distribution companies are expected to make this year. The Nigerian Electricity Regulatory Commission ( NERC) was said to have approved the increase in the tariff payable by power consumers across the country.

Investigations have shown that electricity tariff has been increased by more than 300 per cent in the last four years.  Between 2015 and 2019, the average electricity tariff increased from N12 per kWh to about N32 per kWh. It is also expected to increase again by about 30 per cent in 2020.

In June 2015, NERC issued new electricity tariff that became effective for commercial and industrial consumers from  April 1, 2015. NERC also declared that the tariff for residential consumers would become effective from July 1, 2015.

Nigeria’s power generation has continued to hover between 3,500 megawatts and 4,000MW since the sector was officially privatised in November 2013 despite the increase in tariff. The highest peak power generation ever attained in Nigeria was recorded on February 7, 2019, when the country’s power generation firms delivered 5,375Mw of electricity to the national grid.

This newspaper subscribes to the argument that people and industries should pay for the power they consume even as we argue that any increment becomes unjustifiable if regular supply has not been attained. Why would the regulator increase tariff at a time when power delivery was still poor. It is unfair for consumers to pay higher tariffs when service delivery by power distributors is yet to improve.

The commission did not consult the consumers and other stakeholders before imposing the hike. There is a framework for price review and it entails the process of consultations with real and potential clients.

The Nigerian consumers are not very difficult people and so should be told why there must be increase in tariff when the services are not really there. Consumers were not carried along by the regulator, as required by the standard practice before the announcement of new tariffs was made.

This is not going down well with consumers because power supply generally in Nigeria has not recorded the desired improvement. So, we wonder how it will be seamless for consumers to comply with the tariff increase.

Many consumers are not happy with the development and want NERC to reconsider its position on the matter. Most of the electricity consumers said the charges are not expected to be borne by them under a deregulated regime. The global best practice is to have an autonomous, independent and apolitical power commission with skilled professional workforce for rate determination, particularly with terms that are based on investment to deliver services.

The truth, in our opinion, is that nobody would bother much to pay higher tariff as proposed by NERC if the quality of service is not commensurate because alternatives to power supply in this country are unbearable to households and businesses.

There should be nothing like the electricity distribution companies clamouring for new tariff increase without verifiable investment to build new capacity. Investments in MAP are not a justification for the new tariff. Tariff is not the final solution. There are other areas of a regulatory regime that are not properly enforced. There are issues of collection and remittance inefficiencies and other issues. Electricity consumers are being made to bear the burden of the market.

We believe that doing a review retrospectively is not good for the consumer. There is not supposed to be a review that will cost so much impact. If the review is around five per cent, consumers will not feel it. But when they are outrageous as they are in this instance, it will affect the disposable income of consumers and their ability to pay.