Electricity consumers in Nigeria would begin to pay more for the product courtesy of the National Electricity Regulatory Commission’s (NERC) percent increase in tariffs in line with the Multi Year Tariff Order (MYTO 2.1), which took effect from February 1. Coming on the heels of the last increase in December 2014, this development confirms popular thinking that the Federal Government is more concerned with pricing policy in the power sector than infrastructural improvement.
Though the enforced implementation of the increase might have brought respite to the federal authorities that see such increase as the surest way of guaranteeing heavy private sector investment in the sector, the days ahead would prove if it is a well thought out policy in this season of excruciating socioeconomic challenges in the country. Nigeria has had a history of stormy electricity pricing. This is partly because of the sector’s legendary inefficiency, a development traced to the government ’s monopolistic control of the electricity supply-demand mix.
It is also partly a product of chronic underfunding by government with the attendant unwholesomeness. The ugly situation was not ameliorated by the power sector reforms undertaken by the immediate past administration of Dr. Goodluck Jonathan, which led to the unbundling of the Power Holding Company of Nigeria (PHCN) into 10 power distribution companies (DISCOs) and five power generation companies (GENCOs). Since the near complete privatisation of the power sector, electricity generation has not seen appreciable improvement. Against the official national demand threshold of 12, 800MW, actual generation has hovered around 4, 500MW. There was a time it slumped to an all time low of 800MW. Compounding the scenario is power supply without metering, a development that bred the exploitative culture of ‘crazy bills’.
It is this parlous situation in the industry that unnerves electricity consumers and other non-government stakeholders whenever there is any talk of electricity tariff increase. In the last 14 months, NERC has actuated and implemented two such increases. In December 2014, the commission raised tariffs for businesses, industries and residential consumers in R3 categories, to formally bring into effect the new Multi-Year Tariff Order (MYTO 2.1). However, tariffs for residential consumers in categories R1 and R2 were frozen till 2015. The justification for the increase, NERC said, was the increase in the price of gas.
The year 2015 witnessed much dithering on the subject, largely because of restiveness among non-government stakeholders in the sector. For example, a restraining action was filed in a Lagos Federal High Court by Barrister Toluwani Adebiyi stopping NERC and DISCOs from implementing any increment in electricity tariff pending the hearing and determination of his suit. The trial judge, Justice Mohammed Idris, accordingly granted the ex parte application. However, in the twilight of 2015, the Federal Government took action that demonstrated its resolve to effect the tariff increase, when the commission’s acting chairman, Dr. Anthony Akah, said a tariff increase in 2016 was a fait accompli. However, he conceded that the old order fixed charge electricity consumers pay would be part of the new tariff regime.
The proposed increase raised tariff for residential consumers (RC 2) by about 17 percent, while heavy consumers like manufacturing companies had theirs upped by about 50 percent. More importantly, the new tariffs are reflective of regional sensibilities. The Minister of Power, Works and Housing, Mr. Babatunde Fashola, defending the move, said it remained the only option to enhance stable power supply in the country. Expectedly, strong opposition to the increase came from traditional civil society organization like NLC, TUC on the grounds of its being anti-people, big business platforms like National Association of Chambers of Commerce and Industry, Mines and Agriculture (NACCIMA) and Lagos Chamber of Commerce and Industry (LCCI) have equally faulted the increase.
Instructively, the House of Representatives, the lower chamber of the National Assembly, is equally opposed to it. For NACCIMA, it is piqued by the unilateralism of the Federal Government action. Stating the organisation’s position is the National Vice President, Prince Billy Gillis-Harry, who said such “decision should come from pool of opinion. Every stakeholder should be part of it because the negative impact would be on all …” There is no doubt the Federal Government ’s new drive has betrayed a leadership under stress.
The nation’s economic outlook might be dampening, it is not enough for a unilateral action in a critical sector like power. The nation ’s power sector is not only about pricing and creating enabling environment for private sector players; there is a compelling need for a minimum investment requirement before a demand for any tariff increase could be made. Nigerians are rational enough not to oppose higher tariff, especially when electricity supply improves. We have not seen such improvement. Moreover, availability of pre paid meters to all consumers to eliminate the obnoxious culture of estimated billing system is still far from reality. This is a condition that must subsist. We equally frown at the growing impunity of government agencies, who flout court orders not favourable to them.
When a court order is made, it only takes a superior order to discharge it. We expect Mr. Fashola, a Senior Advocate of Nigeria, to know better. The law that establishes NERC does not confer legal immunity on it, so it must obey court orders.
