New electricity price regime takes effect from Wednesday
A WAVE of opposition at the weekend greeted the 100 per cent electricity tariff increase, which takes effect from Wednesday.
Minister of Power Sale Mamman on June 15 said Nigerians would pay higher electricity tariff from July 1.
He told the Senate power panel: “It is really our only choice to once and for all resolve the long standing issue of the power sector.”
The increase in tariff will not bring about more efficient power supply, the Electricity Distributions Companies (DisCos) warned last night.
The DisCos, through their umbrella body, Association of Nigerian Electricity Distributors (ANED), said implementing the new price regime would be no magic wand.
ANED Executive Director (Research and Advocacy), Sunday Oduntan, who spoke with The Nation on telephone said: “There will be change compared to five years ago. But don’t expect 24 hours of electricity. “
Asked what would be the implication of the new tariff, he said: “There is no increase in generation. Have you heard of an increase in transmission? These are the issues. There is a need for realignment.
“As long as we have people who are not metered, as long as we have staff who are cheating, as long as we have Nigerians who are not willing to pay for energy, then we will continue to have problems.”
The ANED official added in a statement that the Nigerian Electricity Regulatory Commission (NERC) cannot be left out in tariff increase communication.
He said: “DisCos have decried the recent attempt by their regulatory body, NERC, to distance itself from the July 1 commencement of a new service-based electricity tariff regime.
“We are in a regulated sector. We cannot make a decision about a very critical aspect of the sector like tariff without a nod from the regulator (NERC).
“However, what has happened in recent days is that our regulator is warning us not to mention their name or the Federal Government in any of our communication about the tariff increase with our customers. This is certainly very unfair.
“Many stakeholders have expressed their concern at the unusual silence of our regulator, NERC on the upcoming increase and it looks like a unilateral decision by the DisCos.
“We’ll like to inform Nigerians that tariff review (upward or downwards) is the primary responsibility of NERC as our regulator. We are required to submit our proposals and they have the final say.
“Hence we were surprised to receive a letter from NERC to all the DisCos warning them not to mention their name or that of the Federal government in any public communications on tariffs.
“While it is our obligation to communicate the increase, it is also important for customers to know that it is following standard processes of tariff adjustments in the sector with approvals from NERC and the Federal Government.”
NERC Chairman, Prof. James Momoh, asked our reporter to wait for the commission’s official reaction on the hike.
“Wait we will come out with our statement in the next few days. Just wait,” he said.
Ahead of the commencement of the new rate, private operators under the Organised Private Sector in Nigeria (OPSN), said any tariff hike in the face of inadequate electricity supply will worsen the cost of production and result in job losses.
The OPSN said at the moment, electricity outages average about 10 hours per day; with the cost of self-generated electricity averaging N119 billion in 2019.
OPSN comprises the Manufacturers Association of Nigeria (MAN), Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Nigeria Employers Consultative Association (NECA), Nigerian Association of Small and Medium Enterprises (NASME) and the Nigerian Association of Small Scale Industrialists (NASSI).
The Lagos Chamber of Commerce and Industry (LCCI) Director-General, Dr Muda Yusuf, said the power sector reform has not delivered the desired outcomes.
He said there was a need for a holistic approach to the issue of power.
According to him, greater emphasis should be on off-grid solutions to ensure the decentralisation of the power sector.
He said: “Power sector is critical to the development of the country. Most often, there is often a conflict between development objectives and commercial objectives.
“I believe the government still needs to provide some resource support and generous fiscal incentives for investors in the sector because of the economic development and social impact of an improved power sector performance.”
Nigeria Consumer Protection Network President, Kunle Olubiyo, said electricity consumers will like to know how the proposed tariff increase will benefit them.
“Will it put an end to electricity consumers having to invest in the purchase of distribution transformer and line materials?” he asked.
“We need every detail of how the service –reflective tariff will translate to increase in hours of electricity availability, operational and collections efficiency, billing efficiency and revenue efficiency. We want DISCOs to explain how the new rates will reduce leakages,” Olubiyo said.
The minister, in his presentation at an investigative public hearing on: “Power Sector Recovery Plan and the Impact of Covid-19 Pandemic” organised by the Senate Committee on Power, in Abuja, noted that the increase would have taken effect in April.
He said it was postponed till July due to the COVID-19 pandemic and widespread “apathy” towards the increase by Nigerians.
Mamman said: “Initially, the Regulator, following the completion of public consultation on tariff review, planned on conducting a tariff review in April 2020.
“However, due to COVID-19 and customer apathy, the proposed tariff review was delayed by three months.
“The impact of this means the subsidy being incurred in maintaining the current tariff level had to be maintained until July when the proposed tariff review will be implemented.”
He noted that the challenge the nation’s power sector is currently facing in the development and expansion of the nation’s transmission line is to “budget and release Federal Government’s commitment of an estimated sum of N32billion, primarily for Right of Way acquisition and environmental impact mitigation.
“The fund should be provided for in 2020, 2021, and 2022 Appropriation of the Ministry of Power.
“Note that the teething issues, as well as the legacy issues affecting the power sector, is primarily an issue of infrastructural deficit and lack of coordination in the sector.
“It is thus fortuitous that President Muhammadu Buhari has championed the Siemens Electrification Plan under the Presidential Power Initiative, as the central theme of the Government’s strategy in the Sector.
“I believe that all efforts rendered by the many relevant stakeholders within the stakeholders should be aligned with the PPI for maximum effectiveness in implementation.
The Enugu Electricity Distribution PLC (EEDC) indicated plans to commence implementation of the new tariff from Wednesday.
A statement by the company’s head of communications, Emeka Ezeh: “The new tariff, which is service reflective, is designed to ensure that the company delivers improved services to customers; while ensuring that they are billed based on service quality.
“It is expected that the implementation of the new tariff will enable EEDC to execute most of the capital-intensive projects already outlined, geared towards strengthening and expanding its network and delivering the expected quality service to her customers.
“The new regime has given rise to changes in customer class categorisation, as they are now represented in clusters, namely: NonMD, MD1 and MD2.”
Vice President Yemi Osinbajo had last month said Nigerians were willing to pay for electricity if the services were constant and better.
Speaking during a webinar on Economic Sustainability Beyond COVID-19 organised by Emmanuel Chapel, he said: “Most people are used to poor service so they just see every tariff increase as injustice because they are getting poor service but are asked to pay more.
“But where service is guaranteed people have been prepared to pay.’’