The new hike in electricity tariff announced recently by the Nigerian Electricity Regulatory Commission (NERC) is unnecessary considering the poor state of the economy and growing poverty among Nigerians. Under the “service reflective tariff,” electricity tariff rises from N22 to N66 kwh. The new duty, which took effect on September 1, abolished the old billing system and introduced another one with new classes of tariff categorisation as approved by the agency. Under the old tariff regime, per kilowatt hour (kwh), for residential consumers under Ikeja Electric, for instance, was N21.80 but now increased to N53.87, about 120 per cent hike.
As a result of the new order, Distribution Companies (DisCos) have been directed to bill customers in accordance with their classifications. In effect, consumers, who receive less than 12-hour electricity supply, will not be affected in the new hike until service improves. According to NERC, “the order reflects the impact of changes in macroeconomic parameters and revenue requirements and a revised tariff design that aligns with rates paid by customers with the quality of services as measured by the average availability of power over a month period.” The agency also claimed that its decision followed “consultations and directives on tariff policy…”
These claims contradict the recent order of President Muhammadu Buhari for mass metering of consumers in the country in a bid to end estimated billing. Clearly, the new tariff has flouted the presidential directive and offers consumers little or no choice over their consumption patterns. We maintain that any review of tariff ought to be based on improved service delivery, while the poor and the vulnerable in the society should pay less in all cases. None of these has happened.
In June, the Presidency and leadership of the National Assembly intervened to halt the implementation of the new electricity tariff by Distribution Companies (DisCos). The planned hike was then suspended until the first (Q1) of 2021. Without the timely intervention of the government, a new tariff hike regime would have commenced from July 1. All parties agreed to suspend the planned tariff hike because of the ravaging Coronavirus pandemic and its attendant impact on the incomes of Nigerians.
Early in the year, the NERC directed the 11 electricity distribution companies (Discos) to stop further collection of electricity bill under the estimated billing system. The regulatory agency had placed limits on estimated bills that could be issued by Discos to unmetered customers. While consumers thought this was good, the order was not enforced by the relevant regulatory agencies. If the order was enforced, it would have enhanced the power supply chain.
Apart from meeting the metering needs of electricity consumers, there is urgent need to improve the nation’s power supply. Many firms have either closed shop or relocated to neighbouring West African countries as a result of unstable power supply. Some firms run on generators and other sources of power supply, thereby increasing the cost of production. Currently, the national energy requirement is between 40,000MW and 60,000 MW, while generation is less than 5,000MW. We believe that the Discos should show more commitment to meeting the power supply need rather than the constant plan to hike tariffs. It was also agreed by all the parties that the Federal Government should continue to subsidise the power sector by bearing the difference in the present tariff until further notice.
Sadly, electricity consumers still experience unstable power supply, outrageous and indiscriminate bills. While Nigerians are not enjoying regular electricity supply, businesses are equally going down. The damning situation has negatively affected the economy since power is the catalyst for economic development. Without doubt, Nigerians are not likely to oppose any reasonable service reflective electricity tariff if there is adequate supply of electricity as well as meters.
Unfortunately, the Discos are yet to provide prepaid meters for all consumers through the Meter Assets Programme (MAP). Until the Discos are able to meter all households so that people will no longer be subjected to estimated billing, Discos will have a tough time convincing Nigerians the desirability of implementing a new service reflective electricity tariff. The economy is still wobbling, threatened by another recession, with majority of Nigerians at the receiving end of government’s policies. This is not the best time for any hike in the price of electricity. As a matter of fact, profit consideration should not override good service delivery, which the consumers are not getting at the moment.
