A Review of the Nigerian Energy Industry

Electricity consumers groan despite NERC’s tariff holiday

15 February 2015, Lagos – Electricity consumers in some areas of Lagos and Ogun states have described as deceitful the Nigerian Electricity Regulatory Commission’s claim that it has frozen tariffs for residential consumers for six months.

Chairman of NERC, Dr. Sam AmadiThe consumers made these complaints amidst rising bills being distributed to them by the power distribution companies even in the face of dwindling supply.

Some of the affected areas, according to findings by our correspondent, are Ogba, Ikeja, Agege, Okokomaiko, Agbara, Oshodi, Meiran, Akute, Lambe, Ajuwon and Ishaga, which are under the control of the Ikeja and Eko Electricity Distribution Companies.

The customers, who use analogue meters and those who are not metered at all, complained that power supply had not been commensurate with the rising bills.

The revised Multi-Year Tariff Order 2.1 that was approved by NERC came into effect on January 1, 2015. A major highlight of MYTO 2.1 is a six-month freeze on tariff increase for residential consumers (R2), who constitute about 80 per cent of the electricity consumers in the country.

The Chairman, NERC, Dr. Sam Amadi, did say then that the commission had not increased the tariff for residential consumers.

“I need to emphasise this point because it seems lost in the swirl of things. While the scheduled increase will apply to other classes of consumers from January 1, 2015, it will not affect residential consumers until after June 2015,” he had told journalists.

But to Mr. Ayoade Akinsanya, Ms. Temi Bala and Mrs. Rita Etim, who are residents of Akute in Ogun State, NERC’s position is not the reality on the ground as they claimed that they were served higher bills for January compared to what they got in December 2014.

Etim told our correspondent that she was billed N6,300 in January compared to a month earlier when she paid N4,200.

At Meiran area, our correspondent gathered that customers on Monday threatened to beat up a personnel of the distribution company in charge of the area.

NERC had warned, “Expectedly, the electricity distribution companies are not happy about the phased approach adopted by the commission. This means they cannot recoup their growing and previously unanticipated costs, and this may negatively impact their bottom-line in the short run.”

But the commission said that the decision to grant the moratorium was a carefully considered one, arrived at after adequate consultations with stakeholders and careful consideration of the imperative to balance the legitimate demand for adequate electricity supply with the need for a fair tariff.

The freeze was designed primarily to protect and promote the interests of the consumers as well as stimulate the operators to serve the customers better, the regulator insisted.

NERC, in a recent statement, said, “While we have a responsibility to protect the consumers, we are not anti-business. Indeed, NERC is mandated by the Electric Sector Power Reform Act, 2005 to set tariffs that reflect the cost of the operators as a way of attracting and sustaining necessary investments in the sector.

“What we have done with the freeze for residential consumers is to creatively use rate-setting as a balancing tool for achieving desired outcome, to grant relief to one set of stakeholders, while providing incentives to the other as a means of ensuring adequate and regular power supply and optimal customer service.

“The intention, therefore, is to give the consumers a break for six months and provide the operators incentives to improve supply and services. To us, this is not a zero sum. Rather, it is an ultimate win-win not just for the consumers and operators, but also for the electricity sector and the country as a whole.”


– Punch

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