A Review of the Nigerian Energy Industry

Govt commits to reduce electricity costs for small businesses

Dr. Olusegun Aganga*As NERC denies plans to increase tariff

Oscarline Onwuemenyi

26 November 2014, Sweetcrude, Abuja –
The federal government has said it will reduce the cost of doing business for the Micro, Small and Medium Scale Enterprise, MSMEs, in the country by reducing the cost of electricity tariff for the MSME sub-sector

The Minister of Industry, Trade and Investment, Olusegun Aganga who disclosed this at the ongoing Micro, Small and Medium Enterprises Summit in Abuja, said the government was working with the Nigerian Electricity Regulation Commission (NERC) to reduce the electricity tariff for qualifying MSMEs.

Aganga said: “To reduce the cost of doing business in Nigeria, we are working with the NERC to reduce the electricity tariff for qualifying MSMEs”

He also disclosed arrangements by the federal government through SMEDAN to convert the 23 existing Industrial Development Centers (IDCs) to Industrial MSME clusters which will provide work space and shared services at a reduced cost.

Aganga added that the government had reduced the cost of business registration with the Corporate Affairs Commission CAC for MSMEs by 60 per cent.

He said, “SMEDAN has increased its footprint from 13 states to being present in all the states in Nigeria in just five months. This has ensured that we are able to reach all Nigerians in each local government in the country.

“Additionally, SMEDAN has decentralised its operations to ensure 80% of its staff are domiciled in the states and only 20% in the headquarters. This measure has also ensured that our services are spread across the country. We have identified and supporting at least one product in the 774 local government areas of competitive and comparative advantage.

Meanwhile, the Nigerian Electricity Regulatory Commission (NERC) has ruled out hike in electricity tariff in the country.

The Chairman of NERC, Dr. Sam Amadi, while reacting to questions relating to tariff increase and metering Tuesday, said: “There is no plan to increase tariff for consumers by NERC or the federal government. As you know very well, these tariffs have been unbundled to the various Discos.”

Minister of Power, Prof. Chinedu Nebo, has said electricity distribution companies (Discos) either accept electricity loads allocated to them within the current generation capacity of the country or risk would withdrawal of their licences.

Amadi further explained that based on agreement with the Bureau of Public Enterprises (BPE) on Aggregate Technical Commercial and Collection (ATC&C) losses, NERC and the Discos have completed a study on the loss levels and found that the financial requirement of doing business for each of the Discos have increased because the benchmark for losses is higher.

While restating government policy to safeguard consumers from harsh and exploitative tariff increase, Amadi said NERC is clearly of the view that tariff should not be increased for residential consumers until there is service improvement.

He consequently said: “The Discos should not give increased tariff as much as possible to residential consumers, they should find a way to recover their money. So, please discountenance reports that say that NERC or the federal government has increased tariff for residential consumers.”

Amadi further disclosed that NERC has come up with a policy requiring Discos to pay compensation to customers who have paid for prepaid meters under the Credit Advance Payment Metering Implementation (CAPMI) scheme and did not get supplied within 45 days.

Under the CAPMI scheme, willing customers can pay cash for electricity meters and get reimbursed through energy credit. The scheme requires that the meters are supplied and installed for customers by the Disco within 45 days of payment.

According to Amadi, “Those who have paid under CAPMI and did not get supplied, NERC has decided that the Discos will pay back a penalty of N5000 per month for those on single phase meter whom they have not installed meters for within 45 days and N10,000 per month for three phase customers who have paid for meter since November 1 and have not been installed.”

Meanwhile, Nebo, while speaking at the 2014 edition of the ministerial platform in Abuja threatened that any of the distribution companies found wanting in this regard would be sanctioned.

The Minister frowned at the alleged instances of distribution companies habitually rejecting electricity loads allocated to them on the grounds that it was inadequate and not up to their demands, pointing out that such would not be tolerated because Nigerians cannot be starved of power where it is available.

“We have received complaints of Discos rejecting power allocated to them. I saw a query written by NERC to one of the Discos, I don’t want to embarrass them by mentioning names, but we want to call them to order, any Disco that henceforth rejects power sent to it, we will find a way of dealing with them.

“And if it becomes a habitual behaviour, then NERC will have to withdraw their licence, because there is no point starving Nigerians of power when that power is available,” Nebo said.

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