Electricity consumers across the country have described as unfair and counterproductive the take-off of a new electricity tariff regime that would bring about a hike in electricity price with effect from next week Wednesday.
The federal government had earlier suspended for three months the tariff review that was supposed to come into effect on April,1 2020 as announced by the Nigerian Electricity Regulatory Commission (NERC) in its December 2019 Minor Review of Multi-Year Tariff Order 2015 and Minimum Remittance Order for the Year 2020.
In a statement from the ministry of power then, NERC said the move was one of several critical actions that the federal government was taking to ensure citizens had power supply in a difficult time occasioned by the coronavirus pandemic.
NERC had earlier explained that the order was issued to reflect the impact of changes in the minor review variables in the determination of cost-reflective tariffs and relevant tariff and market shortfalls for 2019 and 2020.
Prior to the new take-off date, all the DisCos had issued public notice, informing their customers to prepare for the new regime of electricity price which NERC had tagged: “Service Reflective Tariff,” targeted at ensuring that consumers pay according to the duration and quality of the supply they got.
But most electricity customers the idea of allowing the hike in tariff to happen even at this time, citing, among others, deteriorating electricity supply, inability of the distribution companies to meter customers, and the difficulties being faced by Nigerians as a result of the lingering COVID-19 crisis.
In a chat with LEADERSHIP Sunday, the chairman, Network of Electricity Consumers Advocacy of Nigeria (NECAN), Tomi Akingbogun, said the decision to allow any upward review at this time was counterproductive and unfair to electricity consumers.
“It is not fair on anybody. It is very sad that at a time when governments around the world are giving palliative to their citizens as a result of the COVID-19 pandemic, Nigeria is thinking of increasing the electricity tariff,” he said.
According to him, the move would compound the problem of inflation, low GDP, among others, for the country.
He said what is happening shows that the government does not have listening ear when it comes to people’s welfare.
He stated: “From privatisation till now, the DisCos have only been able to meter about 40 per cent of their customer population. When they came, they were given 2 years to meter everybody and they agreed, but it is now 7 years down the line, and they are still saying they don’t have enough money to meter customers.
“Then they keep pushing for what they called Cost Reflective Tariff as a ploy to exploit Nigerians more even when their supply in most cases does not commensurate with the bills most customers are paying.
“Actually it will not be fair to effect any increase in electricity tariff now. We have told NERC the same thing over and over again, but they don’t care because they are benefitting from what is going on”.
Also speaking, property owner in the New Nyanya area of Karu local government area in Nasarawa State, Mr Festus Akinje, said there was no justification whatsoever for the new tariff at this period considering the power supply situation , which according to him, had deteriorated to a hopeless stage.
He said, “Why are they always talking about an increase in the tariff while keeping silent on improvement in supply? You can see that the power supply situation is deteriorating by the day.
“They have just called us to a meeting and told us that we should be prepared to pay the new price from Wednesday, being July 1, 2020, and I wonder what they are pricing.
“In this area, I think we are the most neglected by Abuja Electricity Distribution Company (AEDC). We hardly have light, but they keep bringing bills, which we have been paying. So what justification do they have to increase our bills?”
Also reacting, the managing director of Classic Boutique, Alekuwodo Osogbo, Osun State, Mrs Florence Ojo Classic, noted that COVID-19 has affected the smooth running of organisations to the extent that many of them were considering laying off their workers.
According to her, any attempt to hike electricity tariff at this material time would further aggravate the dwindling economic condition of most companies in the country and therefore be counterproductive.
But the chief executive officer of LANTE Metals, Agunbelewo, Osogbo, Chief Gabriel Adewale, who said his organisation needs electricity to survive, noted that as long as there was efficient distribution of the electricity, it was a welcome development.
He, however, said that customers would have to bear the cost because according to him, no organisation would want to run at a loss. Adewale called on the federal government to halt the proposal or be ready to subsidise to alleviate the suffering of the masses.
Similarly, John Obot, member of the Uyo Chamber of Commerce, Industries, Mines and Agriculture (UYCIMA), also berated the federal government for increasing the tariff and doing nothing about estimated billing by distribution companies(DisCos).
He said, “We are all aware how epileptic the electricity supply is in the country. We are yet to get value for the money Nigerians pay on the electricity bill.
“Why increase the tariff when the supply is not stable and consistent? Government do things before thinking of their implications, otherwise, there is no basis for the increase in electricity tariff for now”.
In Niger State, most of those interviewed were of the opinion that the new tariff would be an additional burden on their businesses and also suggested that the increased tariff should come with improved power supply.
Malian Rambo Mohammed, a shop owner said, “Most of us depend on generators and the little power we get. Sometimes the bills we pay are on the high side in this area because we don’t have prepaid meters.”
Another business owner around Tal Building Market, Minna, Ola Ganiyu said, “It will make no difference if the new tariff comes to be, except they improve power supply, and distribute prepaid meters.”
In Kaduna, many business owners rejected the proposed electricity tariff hike, saying there should be improved electricity supply first.
Other business owners lamented that with low business activities due to the COVID-19 pandemic, implementing the tariff hike would kill the economy as many may not be able to run their businesses again or make profit.
A hotel owner in Sabon Tasha who identified himself as Eze Okafor said, “Implementing electricity tariff hike now is not good timing because of the COVID-19, many businesses are still battling to survive this time. There is no serious business activity now as COVID-19 is destroying everything. The authority concerned should wait till after COVID-19, by that time, businesses will resume fully and business owners can be able to pay the bills.”
A welder based in Barnawa, John Kem, advised that electricity supply must be improved first before any tariff hike.
“We are still experiencing low electricity supply, those concerned should increase electricity supply first before tariff in tariff,” he said.
An Owerri-based businessman and the managing director, Harolds Group Of Companies, Dr Harolds Wilson Onumo, commenting on the increase, said the COVID-19 pandemic has affected everything, and citizens across the globe are battling with economic meltdown.
Onumo explained that while most firms were downsizing as a consequence of the COVID-19 pandemic, it was unreasonable to increase tariff on electricity.
Another respondent and managing director, Domino Paramount Limited, Chief Chima Chukwuyere, stressed that in other climes where people’s welfare are taken into consideration, governments of those countries have been paying their citizens allowances.
According to him, this was in realisation of the fact that for over five months, offices and industries were shut down due to the COVID-19 pandemic.
Chukwuyere recalled vividly the promise made by the federal government that electricity supply to all Nigerians would be made free for three months so as to cushion the effect of the COVID-19 pandemic.
He, however, expressed disappointment that nobody has made any comment in respect of the bogus promise and called on the federal government to fulfill that promise before contemplating any tariff hike.
“We ought to know, if the federal government has reneged on the intended palliative to the people in respect of electricity supply,” he added.
Chairman, Gombe State University chapter of ASUU, Dr Oladimeji Lawal Gombe, described the unfolding events in the Nigerian electricity sector as a sad commentary on the nation.
According to him, “Nothing can better illustrate the insensitivity of the government to the plight of the masses in terms of loss of access to income, the skyrocketing inflation and the general disruption of livelihood occasioned by the COVID-19 pandemic than the mindless increase in electricity tariff”.
Lawal noted that even if the increment was established to be justifiable, this was not the appropriate time for its implementation.
He said, “Mind you, the country is still largely under lockdown imposed as part of the measures designed to minimise the spread of the deadly COVID-19.
“The Nigerian government was not able to provide the necessary support to the citizenry as was done in other civilised countries.
“My advice is that the increments should not be allowed to come into effect. Otherwise, it will further worsen the living conditions of the masses”.
Benjamin Ifejiokwu, an Asaba-based fashion designer, said he can only welcome the new electricity tariff if he would enjoy 24-hour power supply.
According to him, failure of this means he would continue to provide his own power supply through a generator which he has been using for more than three years now.
He said, “Tariff shouldn’t be increased for any reason. The current rate is even too high because a lot of people pay for what they didn’t consume. I was paying almost N15,000 with the estimated bill method, and having made several efforts to get a prepaid meter without suceeding, I disconnected my line from Benin Electricity Distribution Company (BEDC), and since then , I run my generating set for the past three years.
“I couldn’t boast of four hours of power supply daily, what will the new bill cost if NERC is allowed to have its way? I believe that the DisCos are extorting Nigerians. I have applied for a prepaid meter but have not gotten it because the DisCo benefits more from the estimated bill method, so an increase in electricity tariff without prepaid meter is corruption.”
Stakeholders in Rivers State also reacted with mixed feelings over the increase in electricity tariff.
Speaking with LEADERSHIP Sunday in Port Harcourt, a business owner, Darlington Nwauju, said the capacity of most distribution companies was questionable.
He stated: “The capacity of most of the DisCos is questionable. What is being generated is not being adequately distributed and so I believe a lot of the DisCos are lacking in financial capacity to give value for money.
“Government has to review the operational capacity of these DisCos.Issues of metering have remained unresolved. More than 50 per cent of electricity consumers are under estimated billing.”
Also, secretary, National Association of Small Scale Industries, Jigawa State chapter, Comrade Danlami Shuaibu Dutse, said the increase in electricity tariff as was a death sentence on small – scale industries in the nation still battling with the challenges of the COVID-19.
He said it was irrational to increase electricity tariff when consumers were not even guaranteed 12 hours daily power supply.
Comrade Danlami added that increasing power tariff means increasing the cost of production of goods at a time when the purchasing power of consumers was low due to the COVID-19 pandemic.
He said, “So if we produce what consumers can’t afford to buy, then technically we are bound to stop production and shut down the industries.
“Poor power supply has been the major challenge of industrial development in Nigeria despite the billions of naira sunk into the sector by the federal government”.
It Will Improve Power Supply – DisCos
But in separate statements, the various distribution companies (DisCos) assured that the new tariff regime would guarantee improved service to Nigerians.
The Kano Electricity Distribution Company (KEDCO), in a statement by Mr Ibrahim Shawai, the company’s head of corporate communications, said the new tariff regime would guarantee quality customer-oriented services, improvement in power supply, and enhance availability and reliability in its franchise areas.
It stated: “The Service Reflective Tariff is based on guaranteed hours of power supply, which will eventually deliver higher hours of quality service delivery, to ensure that customers get maximum satisfaction from KEDCO.
“Similarly, those currently enjoying higher hours of supply are expected to pay more, however, commensurate with the hours of supply.
“With the new initiative, customers will be categorised into five bands based on clusters for effective service delivery.”
Recently, AEDC, like the other 10 DisCos, served a notice, informing customers across its franchise area about the implementation date of July 1, 2020, for the new tariff regime, urging them to prepare.
The notice reads: “Dear customers of AEDC, please be informed that a new tariff regime called Service Reflective Tariff will become effective from Wednesday July 1, 2020.
“In this new tariff, there will be a marginal increase in the cost of electricity per kwh but it is all customers that will be immediately affected.
“The principal benefit of this new tariff is to, among other things, ensure improved service to you, our esteemed customers with longer hours of supply. The new tariff will also help us in the long run to recoup more funds for greater improvement in power supply to our customers.”
Also, the electricity distribution companies (DisCos) said there was an urgent need for the federal government to do something about the high cost of gas needed to generate power in order to save the power sector reform.
This was contained in a statement issued on behalf of the DisCos in Abuja by the executive director, Research and Advocacy, Association of Nigerian Electricity Distributors (ANED), Barr Sunday Oduntan.
The statement noted that the cost of gas remains one of the key determinants of the electricity tariff in Nigeria and it was high time the government found a way to help bring down the price in the interest of the sustainability of the power sector.
“Most of Nigeria’s power-generating plants are thermal plants. At present, the energy generation mix is around 80 per cent thermal and 20 per cent hydro.
“They use gas as their fuel and as long as the price of gas is high, the cost of generation and the eventual tariff to the end user will also be high,” the statement noted.
Arguing further, the statement noted that the cost of gas was also affected by fluctuations in forex, and as the cost of gas (and generation) would rise due to forex fluctuations, the tariff was fixed in naira and may not account for this difference especially because of the absence of a commitment to adhere to periodic tariff reviews.
“As we all know, today, the price of gas for local power production is a little over three dollars for one million British Thermal Units (mmbtu). Meanwhile, in this same country, the cost at which LNG exports gas is less than half the same amount.
“If you also consider that some of these IOCs are still flaring this much-needed gas into the atmosphere, you will realise that there are many options available to the government to intervene through in the quest to make electricity more affordable,” it further explained, adding that the cost of gas presently accounts for almost 70 per cent of all the input the plants utilise to generate power.
“Except we begin to consider solutions from that angle, we may not make much headway in providing the cheap electricity Nigerians need to move the country to an industrial giant,” Oduntan said.
According to him, the absence of a market-reflective tariff has continued to bedevil the sector and was at the moment responsible for most of the N1.5trillion liquidity gap that has been threatening to derail the power sector reforms for years.
He said with effect from July 1, a new performance – driven increased tariff structure would take off as a step towards narrowing the liquidity gap.
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