A Review of the Nigerian Energy Industry

Nigeria budgets N50bn to cushion electricity tariff hike

*Committee blames corruption, poor governance for wide metering gap

Oscarline Onwuemenyi

30 May 2012, Sweetcrude, ABUJA – The Nigerian Electricity Regulatory Commission, NERC, has disclosed plans by the Federal Government to provide the sum of N50 billion as subsidy for electricity consumers in order to reduce the cost of what Nigerians will pay under the new tariff which kicks off tomorrow (June 1, 2012).

The move comes even as NERC continues its advocacy for the tariff hike, which it argues would enthrone efficiency and good governance in the Nigerian Electricity Supply Industry (NESI), even as it eliminates waste and guarantees cost-reflective pricing.

The Chairman of NERC, Dr. Sam Amadi, noted on Wednesday while receiving the report of the Committee on Public Inquiry on Metering in the Nigerian Electricity Supply Industry, that under the new tariff regime, different classes of consumers will pay different rates applicable to their classes for their electricity supply.

According to him, “Low income earners who use less electricity will pay less than high income earners who consume more electricity. Lifeline consumers (R1) will enjoy the special benefit of not paying a fixed charge for their electricity.”

He added that, “In order to reduce what most Nigerians will pay under the new tariff, a N50 billion subsidy will be applied to R1, R2 and C1 (small and medium enterprises) customers. R2 customers who constitute the overwhelming majority of consumers will only pay between N11 and N12 instead of the average cost of about N24.

“Under this new tariff, customers do not have to pay to purchase a meter because this cost has been included in their tariff. They only have to pay a minimal fee for connection which is approved by NERC.

Meanwhile, the Chairman of the Committee on Public Inquiry on Metering in the Nigerian Electricity Supply Industry, Mr. Bamidele Aturu has blamed the wanton corruption and indiscipline of Chief Executive Officers of Distribution Companies (DISCOs) for the massive gap in the metering in the sector.

Aturu, who presented the report of his Committee’s findings, noted that NERC should intensify its monitoring and enforcement apparatus to ensure proper implementation of existing regulations on metering, billing and cash collection as well as overall improvement in customer service to eliminate the culture of impunity in the system.

He noted that the Committee conducted public hearings in the six geo-political zones of the country in order to carry out the assignment. “The public hearing afforded members of the committee the opportunity to interact with all the stakeholders. Feedback from the public hearing clearly indicates the existence of institutional and human factors that have led to the present state of emergency in electricity metering in Nigeria.”

He added that, “The Committee discovered that less than 50 percent of the registered customers in the Nigerian electricity sector are metered. This has led to the prevalent practice of arbitrary charges based on unscientific estimation of electricity consumed by customers by the DISCOs in order to meet up with their overhead costs in an environment of inefficiency and dwindling supply of electricity.”

Specifically, he noted, the Committee found out that the “total number of customers captured in the records of operators of the Nigerian Electricity Supply Industry (NESI) is 5,172,979, which represents about 18.65 percent of Nigeria’s total households put at 28,900,492 as provided by records from the National Bureau of Statistics in 2006.

He added that this record, however, does not include hose enjoying electricity illegally who are not registered by the Distribution Companies, known as illegal consumers.

According to Aturu, out of the number of customers registered, only about 2,893,701 or 55.94 percent were metered, while about 2,355,045 or 45 percent were unmetered. “The Committee however discovered that out of the total number of customers metered, about 701,385 or 22 percent of the meters were faulty.

“Thus, at present, a total of 2,956,069 or 54.83 percent of all the customers registered are not metered at all or have no functional meters. On the average, therefore, only about 2,434,541 or a minute 8.42 percent of the total households in Nigeria are currently being billed correctly by all the DISCOs, if a household is used as a metering index.

“The remaining customers are therefore left at the mercy of estimated billing. This development has created a wide gap in effective billing which calls for emergency response,” he stated.

The Committee chairman noted that although DISCOS proffered inadequate funding as the reason for non-deployment meters, the Committee considers the excuse as untenable since it observed that the DISCOs had meters in stock, but failed or refused to supply and install them accordingly.

He pointed out that in most of the DISCOs even though meters were in stock, customers existed who had paid for years and were yet to be supplied any meters.

He added that, “It was further established that he CEOs were responsible for the inefficiency and unaccountability that permeates the system. For instance, the monies for meters are paid through draft by customers to the CEOs, and there is no feedback as to whether they get the meter or not and how long the customer stays before getting the meter.”

The Aturu-led Committee further charged that there had been no proper accountability for the N2.9 billion provide by the Federal government in the MYTO 1, which was released to the DISCOs to make meters available for customers.

He added that, “Although the Committee was informed that the CEOs of the DISCOs are yet to fully account for the funds, we found that their customers remain largely unmetered. There are evidences of some DISCOs refusing customers’ pre-payments especially for meters.”

In this article

Join the Conversation