Relying on what it calls an amended “special Multi Year Tariff Order” or MYTO 2.1, the Nigerian Electricity Regulatory Commission (NERC) announced the other day a sharp increase in electricity tariff effective, supposedly, from yesterday, January 1, 2015. Coming at a time when power supply output has dropped below 3,000 megawatts (mw), with adverse effects on business and economic activities, the increase is certainly ill-conceived and ill-timed, a slap in the face of Nigerians. It also shows gross insensitivity on the part of a government, which does not appreciate the suffering of the people as a result of the near total blackout in the country. What is the moral basis for paying for services not provided? It amounts to fraudulent exploitation of the masses.
Chairman of NERC, Sam Amadi, had told journalists in Abuja that the increase is “premised on the verified losses that the DISCOs were facing and the new price of gas, which took off this month.” He said the implication of the increase in losses level is that tariff must go up because the cost of distributing power has increased.
Amadi urged the distribution companies “to design a tariff on how to recover their revenue,” noting that what NERC had done was to insist that they did not increase tariff for some customers for six months. It is unfortunate that NERC is concerned that the DISCOs lose money without sparing a thought for what the members of the public are losing as a result of the epileptic power supply in the country.
The insensitivity is not assuaged by Amadi’s declaration that: “We have taken a regulatory policy to say they will not increase the tariff of residential consumers for the next six months until there is an improvement in service delivery.” For indeed, surprisingly, he expressed sympathy with the DISCOs for the loss they would incur, calling it a “sacrifice.”
From the foregoing, it is obvious that NERC is more interested in the losses incurred by the non-performing DISCOs by taxing electricity consumers through increased tariff. NERC could recognise that the cost of doing business is high only for the DISCOs, whereas, the same unhealthy condition affects practically every business that uses power but it cannot be bothered! Lack of adequate power supply has forced all businesses to rely on private generating sets and diesel to operate. Those that can no longer afford these have since shut down, compounding Nigeria’s woes.
Several businesses in all sectors of the economy spend multiples of millions of naira on daily basis on diesel in addition to the high electricity tariff paid to the DISCOs for power hardly supplied. If NERC would be so disposed to having the DISCOs recover their costs, why is there no corresponding plan to assist hard-hit businesses that are sinking under the heavyweight of high overhead cost? Why must NERC rob businesses to pay the DISCOs? There is certainly no fairness in the latest tariff increase.
Going by the worsening electricity supply situation in the country caused by endemic problems, including shortage of gas, rather than see any improvement, Nigerians may have to brace up for more hardship. There is no indication that there would be any improvement in power supply in the next six months when another tariff review is expected to take place.
Shortage of gas, which is the fundamental problem, has not been addressed and the blame game as to why there is no gas continues. As for the hydro-power stations, with the onset of dry season during which there is low water level for the dams to operate effectively, there would not be any respite either in terms of low electricity supply. Since no significant improvement in power supply is expected even by the middle of 2015, it all means that the DISCOs would continue to operate at a loss, which cost would in turn be passed to consumers. What a shame!
Instead of thinking of hiking tariff all the time, government should focus on the diversification of the power supply sources to reduce over-dependence on gas or hydro. A power supply mix is needed to stem the endemic electricity problem and it is, indeed, strategically unwise for any government to rely wholly on one source for its electricity development programme. For, as long as lack of purposeful vision remains, there will be poor power supply and consumers will continue to bear the burden of paying a premium for services not rendered.
