Tariff hike: Fading hopes and power supply expectations

30 December 2015, Lagos – Nigerians cannot help but be tired of promises and power outages especially at a critical time when the crude oil prices is doing more harm to the economy and the consumers are awaiting February 2016 to begin higher tariff on electricity they hardly enjoyed.

Babatunde fashola

Mr. Babatunde fashola, Minister of Works, Power and Housing

However, the expectations of consumers appeared to be at its peak going by the promises from the government and the antecedents of the ‘Golden boy of Lagos’, who was appointed as the minister in charge of the troubled power sector.

As part of the moves to revive the sector, the Minister for Power, Works and Housing, Babatunde Fashola, believed that a cost reflective tariff is the best way to improve the services rendered by the Distribution Companies (Discos), saying “without an increase in electricity tariff, there will not be regular power supply,”

With this government take, the Nigerian Electricity Regulatory Commission (NERC) approved a new electricity tariff regime billed to take off February 1, 2016.

However, the consumers believed that the Discos does not deserve the increase, even as they find it difficult to believe that they will offer better supply and improved services, due to past experiences. The Discos are therefore boastful of better days ahead with lots of investment promises.

Former Chairman of NERC, Sam Amadi, while announcing the new tariff said: “This is good news for electricity consumers who have long asked for a more just and fair pricing of electricity. The regulatory commission had promised to address all the complaints against fixed charges through a regulatory process that promotes investments in the electricity industry without unfairly burdening electricity consumers. This is in line with NERC’s mandate to be fair in all its regulatory interventions”.

Although, the new tariff regime comes with an increase in energy charges, all electricity consumers (residential as well as commercial) will no longer pay fixed charges. Their total bills will depend on the electricity they actually consume and may be reduced when they conserve electricity. Consumers will no longer be spending money every month to pay for fixed charges even when they do not receive electricity in their homes and business.

According to Amadi: “The objective of the new tariff is to enable prudent consumers to save money on electricity bill as they can now control their consumption and not pay monthly fixed charges”.

Nigeria, being the most populous country in Africa ironically had been at the nadir of global electricity generation and consumption due to near-abysmal low level of investments in the country’s electricity supply industry over the past decades.

Interestingly, the stark reality is that while Nigeria’s per capital electricity consumption has remained lowest in the world, there is a large demand- supply gap in the nation’s power sector due to lack of investments coupled with a dearth in infrastructure.

The Discos have also expressed worry that in the new value chain which emerged post privatization, they have become the weeping child of the power sector, carrying the cross of other players- the generating companies – Gencos, Transmission Company of Nigeria (TCN) and even the power plants.

Such enormous responsibility is coming amidst apathy, hostility, ignorance and prejudice against the Discos and in view of the shortage of supply arising from disruption and shortage in the supply of gas to power. Discos therefore are in dire straits as they continue to dance in the sun with heat on them.

The Director, Association of Nigerian Electricity Distributors (ANED), Mr. Sunday Olurotimi Oduntan, said: “This is where we were supposed to be two years ago when we took over. However we are not doing bad, but i can assure you that we are going to do our best to provide improved the services. I am happy that we were able to forego the fixed charges that Nigerians were yearning for, and anything that can making things better for Nigerians we are all for it, because we are all Nigerians and we are also electricity customers.

“Its a good starting point and i hope we will get there. What we have been calling for is that we need a tariff that will enable us to approach financial institutions, and allow us to put in that much needed investment that will drive us to the promise land,” he said.

Oduntan went down the memory lane that between 1989 and 1999, there was no single investment in the sector, hence, the rot of 50 years cannot be cleared completely in two years.

He therefore, urged Nigerians should endure with the Discos, assuring that they will also see improvement, “especially now that we have are having a new set of tariff that is cost reflective,”

He therefore, assured that the Discos shall comply with any regulation under this new tariff, particularly in the prepaid metering directive.

The Discos are engrossed in several problems, consumers in their various locations expect them to improve quality of supply by strengthening and upgrading of the network, achieve 100 percent customer metering to eliminate estimation, and put in place multiple payment channels to improve payment convenience.

In the aftermath of the privatization and the threshold of the Transitional Electricity Market (TEM) in Nigeria, certain issues cropped up and worsened efforts at improving quality of electricity service regulation. But the with the recent development, electricity consumers are optimistic that the long awaited respite might be around the corner.

  • The Guardian
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