A Review of the Nigerian Energy Industry

Consumers groan under new electricity tariff

Clara Nwachukwu
& Kunle Kalejaye

03 July 2012, Sweetcrude, LAGOS – PREVIOUSLY, I recharge my meter with N3,000 and I get 281 units of electricity, but under this new tariff, I am getting only 165 units,” complains Mrs Yetunde Lawala, a retailer in Ikeja.

“The worst of it is that since this June, I cannot remember how many times I have seen light in my house, and yet we are being made to pay more for less,” she added.

Lawal’s case is only but one in the legion of complaints that have trailed Nigeria’s new electricity tariff, which became effective from June 1, under the second phase of the Multi Year Tariff Order, MYTO 2.

While the supermarket operator can actually access her electricity supply situation since the introduction of MYTO 2, as she has a prepaid meter, a resident at Ijaye, Mrs Angela Amaechi, wonders “how my bill that never exceeded N2,000 on estimation because I don’t have a meter suddenly rose to N4,750. If they say it is 11 percent increase, but this is more than 100 percent.”

From the north to the south, and from the East to the West, consumers are wondering about the “methodology” used to arrive at the astronomical hike in their electricity bills contrary to what the industry regulator, the Nigerian Electricity Regulatory Commission, NERC.

Thinking his problem would be reduced if he acquired a prepaid meter, Mr Victor Dagogo, an engineer with one of the oil companies in Lagos, said, “I approached a PHCN staff at the Ikeja Headquarters on the possibility of getting a prepaid meter, and I was told to bring N35,000. I asked for what, he said N25,000 is for the meter itself, and N10,000 for processing and connection. I reminded him that the minister had already said meters will be issued for free except for the connection fees and that was the last I saw him or talked about it.”

NERC is worried
In every aspect that counts, the electricity situation has gone from bad to worse, and the cycle continues. The level of corruption still remains high, so much that even the NERC itself is worried and has had to intervene in a couple of cases, already.

The industry regulator, which admitted that the Federal Government made a mistake by rushing into the new tariff regime, is now battling to tackle the challenges that have been thrown up.

Chairman of the NERC, Dr. Sam Amadi, confessed to Sweetcrude in a telephone interview: “We have made a mistake of rushing before preparing the grounds. But we are also not going to sit down and wait, we are going to move very fast, so that when we go to the public we present a concrete plan.”

Planning is key to success
Given Nigeria’s attitude to always rush into things without first preparing the grounds, the generality of the public had condemned government’s move to introduce the MYTO 2 as ill-timed, as there was nothing on ground to prepare the people for it.

But the Minister of Power, Prof. Barth Nnaji would not hear any of it, exclaiming during his last press conference in Lagos that “There can never be a right time. Let us start first and gradually go from there.”

But, there has been no gradual progression in electricity supply as anticipated, as even the Ministry of Power has failed to meet up with its own obligations in providing energy saving bulbs to cushion the effect of the hike. Indeed, there is hardly any energy to save as supply has been at its lowest in a very long while.

No explanation has been given, and when Sweetcrude called an aide of the minister on phone, he said he was in a meeting. He never replied to a text message sent to him.

Similarly, the deployment of meters, which should have begun immediately and rounded off in 18 months, is experiencing some challenges.

A resident in Amowo-Odofin area of Lagos, Soji Ajani, lamented that he has always paid estimated bills even with having analog meter, and was hoping to get a reprieve through the prepaid meters.

He said, “PHCN officials don’t read out meters and this automatically mean that we are been over billed. We heard that prepaid meter will be distributed free but no block or flat in this our zone has gotten any prepaid meter.

However, some residents in Festac Town were lucky to have acquired the prepaid meters before the advent of MYTO 2. But it is not yet a success story, as only a handful of residents have them.

The Zonal Chairman of Community 3, in Festac, Mr Okocha Godwin, disclosed that only five per cent of residents in the area have prepaid meters.

He noted that if the prepaid meters were made available to all consumers, it would eliminate issues associated with over billing.

He said “The federal government has order PHCN to distribute prepaid meter for free. We support the ideal of prepaid meter because you will pay for what you consume. Let them give the meter for free and then we will pay the installation fee.”

Matters arising
Agreeing that the success of MYTO 2 cannot be assessed in this first month of operation, Amadi said that all that the NERC has achieved so far is laying the ground work and framework for the implementation of the new tariff regime.

According to him, “We are still working out the methodology for ensuring that things are delivered, especially in terms of data and in terms of providing information on the energy consumption and cost of billing for distribution and all those customer service issues.”

He added that the commission is battling to institute transparency in the system and urged consumers to report every act of malfeasance so that it can take appropriate actions against the offenders.

In view of the entrenched corruption in the system, Amadi argued that there was the need for all concerned staring from the Presidency, the National Assembly, civil society groups as well as the general public to support the regulator.

As he noted, “The challenge is also how much support can we get from the institutions because our role is very clear, we want to sanitise the market, we want to clean up the system and this clean up requires a strong political support, it requires the National assembly and the civil society to understand the need to fight corruption.

“If we don’t fight to entrench good governance, where the agencies are allowed to be properly regulated in terms of their finances, their procurement, everything; you can’t have power in this country. And It doesn’t matter if you privatise or don’t privatise.”

Bigger fortunes for DISCOs
Notwithstanding the hues and cry against MYTO 2, the distribution companies believe the new tariff regime herald brighter future for their operations, especially as it grants them some measure of financial independence to run their operations.

While the Chief Executive Officer, CEO, of the Ikeja Electricity Distribution Company, Mr. Chris Akamnonu, refused to speak over the telephone for fear of being misquoted, his counterpart at the Eko Zone, Mr Oladele Amoda, said the new regime has improved the fortunes of the DISCOs.

He said the new regime “gives us all kind of independence to operate. It is good for us, it is now left for us to work hard and ensure that our customers are happy.”

But, he gave the assurance that the consuers too will soon be smiling like the DISCOs because “As from the end of July, we will see a gradual improvement in power supply because the gas issue has been discussed and efforts have been put in place to ensure that gas gets to the power stations.”

He added that “once the improvement begins, it is going to be on a tremendous and sustainable basis, and from there the sector will be transformed. Maybe by next year people will forget all the current challenges that we having now.”

Charting a new course
In view of the plethora of challenges, the regulators and operators are making desperate efforts to regain consumer confidence in the system.

Specifically, the NERC has scheduled to hold “a public consultation with the various stakeholders and the CEOs, and finally put out the methodology and the connection with the methodology on the10th and 11th of July.”

The NERC chairman argued explained that the essence is to ensure that that consumers get value for their money as well as “ensure sustainable supply by improving reliability, by providing meters, providing transformers and making the expected innovations.”

Ahead of the consultation, the Eko Zone, apart from holding series of customer forums, also last week held wide consultations with the marketers with a view to ensuring customer satisfaction with services rendered.

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