Pitiably ineffective as a regulator, the Nigerian Electricity Regulatory Commission has shown once again that it is very adept at heaping misery on vulnerable electricity consumers while protecting the interest of the oppressive and incompetent power sector investors. Hiding under the guise of implementing the Multi-Year Tariff Order, NERC bowed to pressure recently and approved an increase in electricity tariff effective from April 1, 2020.
Although the regulatory authority has come out to claim that what has been done is not a tariff increase but only “a retrospective adjustment of the tariff regime,” the main point that matters is that electricity consumers will have to pay more for the same poor quality of service on offer, as they have been doing all along. The Association of Nigerian Electricity Distributors, through its spokesman, Sunday Oduntan, has also insisted that the new tariff regime, which has been met with serious opposition by stakeholders, would be implemented unfailingly by April.
It is still unfathomable why, of all the pressing issues in the comatose power sector that demand the intervention of a regulator, tariff adjustment is the most important thing that has caught NERC’s imagination. There are issues such as limited distribution network, metering gap, limited transmission line capacity, gas supply shortage and technical and commercial losses. Agreed that it is within the purview of NERC to review electricity tariff from time to time, an upward review of tariff should, however, not be automatic; it should be a reflection of the quality of service being delivered to the customers.
The same NERC that claims to be carrying out its statutory functions has not been forthcoming in enforcing its order over the provision of prepaid meters to consumers to enable them to pay only for the power they consume. NERC has also not been able to get the Distribution Companies to do away with “estimated billing,” a fraudulent concept that has exposed electricity consumers to brazen extortion by the DisCos. Customers are given “crazy” bills and are expected to pay, whether they are supplied electricity or not; and with a new tariff regime in place, more of such arbitrary bills await the hapless consumers.
This should not be allowed to continue, which is why the idea of capping estimated bills should be strictly enforced. NERC has promised to come up with a regulation in February that “will put a maximum amount which the DisCos can charge a customer that it had not been able to provide meter for.” This is not the first time the regulatory body would be telling the DisCos to cap their bills to unmetered customers. This time, it should not only be enforced but should be done scientifically and competitively so that a customer on estimated billing will not have to pay more than what a metered customer living within the same vicinity is paying.
Ever since the skewed privatisation that resulted in the transfer of ownership of the unbundled former public utility, the Power Holding Company of Nigeria, to some ill-equipped emergency Nigerian investors on November 1, 2013 took place, very little improvement has been witnessed in the power sector. Even if the transmission and generation legs of the country’s power tripod can be said to have made some little progress, certainly not the DisCos, which have emerged as the weakest link in the electricity value chain.
It is on record that power generation in Nigeria stood at 3,712.4 megawatts on November 1, 2013, according to the Nigerian Electricity System Operator. After six years, the power available for distribution is estimated at 4,000 MW. From 12,910.40MW in 2013, the installed capacity has increased to 13,427 MW now. Considering the fact that the population has further increased from 171 million then to over 200 million now, it means the situation is actually worse. It is compounded by the fact that the DisCos are rejecting power when there is not enough to go round.
The usual refrain from the DisCos has been that customers should pay “a cost-reflective tariff.” When they are not talking about consumers paying more, they are whining about electricity theft and the unwillingness of customers to pay their bills. However, very little is ever said about improving the quality of electricity supply. It has also become a problem to get the heavily indebted DisCos to remit to the Generation Companies and Transmission Companies tariffs that have been collected on their behalf. This has made it difficult for the GenCos to pay for gas with which to generate power.
This has been the mess called the Nigerian power sector, which is why the government should not just fold its arms and allow the sector to continue to undermine the economy. In his New Year message, the President, Major General Muhammadu Buhari (retd.), promised to liberalise the power sector to allow businesses to generate and sell power. He also promised to develop the Mambilla Power Project. This shows that he is not comfortable with the power situation in the country. But he has to go beyond just liberalisation and developing another hydroelectricity project. The power sector privatisation requires a complete overhaul to make it serve the people better.
The main motivation for embarking on privatisation was to enhance efficiency. NERC should strike a balance between cost of service and tariffs and value of service and tariffs. Sadly, electricity consumers are still buying and repairing distribution equipment five years after power privatisation. From all the available evidence, the current crop of investors cannot take the power sector beyond its current level. The government should therefore try to use all legal means to persuade them to cede their stakes to foreign investors with name recognition in the power industry to inject new life into the sector. With power generation of 4,000 MW compared to its continental rival, South Africa, which boasts over 50,000 MW, there is no way the Nigerian economy can compete effectively.
Government should make open the outcome of the Governor Nasir el-Rufai-led panel on privatisation review that was slated for the end of last year. Nigeria’s economic survival depends on how fast the government is able to act on the power issue.
