Much ado about new electricity tariff

21 February 2016, Lagos – The new electricity tariff announced by the Nigeria Electricity Regulatory Commission which kicked off on February 1, 2016, has set the federal government, the electricity distribution companies (DISCOs), Generation Companies (GENCOs) as well as the organised labour and the National Assembly on a collision course, reports Ibrahim Apekhade Yusuf

*Dr. Tony Akah, NERC.

*Dr. Tony Akah, NERC.

As the new electricity tariff a fait accompli? That is the question being asked by the electricity consuming public, many of who are hard pressed to believe that they would have to pay more despite not getting value for their money.

Crux of the matter

In the circular announcing the new tariff regime signed by Dr. Usman Abba-Arabi- Head, Public Affairs of the NERC, he said part of the concession announced by the acting Head of the Commission, Dr. Anthony Akah is the removal of fixed charge under the new tariff regime, a decision, he maintained, as taken in deference “to consumers and a measure to ensure electricity distribution companies improve on service delivery as their income is dependent on the quantity of electricity used by their customers.”

However, the new tariff will see some residential customers paying between N4 and N41.31 per kilowatt/hour or a little more depending on consumption and DISCOs of the customer. The distribution companies get 25 per cent.

In line with the multi-year tariff order (MYTO), the tariff will go up in two years and subsequently reduce in the coming years.

Imprimatur of support for electricity tariff hike

The Minister of Power, Works and Housing, Mr. Babatunde Fashola, while justifying the 45 per cent increment in electricity tariff, maintained that the action remained the only way to enhance stable power supply in the country.

Fashola, who stated this when he appeared before the Senate Committee on Power, explained that an Act of the National Assembly actually empowered the Nigerian Electricity Regulatory Commission to increase tariff, hence it would not be able to stop the implementation of the new tariff regime at this stage.

He explained that the rise in the cost of procuring raw materials to generate electricity was one of the reasons for increasing the tariff and that the best way to sustain the current stable power supply in the country.

Fashola maintained that the federal government and consumers had a duty to sustain the current tempo in the power sector by encouraging the power generating firms to produce maximally at the right price level.

Shedding more light on the foregoing, Sunday Oduntan, speaking under their umbrella body, Association of Nigerian Electricity Distributors (ANED), the DISCOs said power consumers’ cooperation has become imperative so as to ensure a hitch free service delivery.

Oduntan who is Executive Director, Research and Advocacy of ANED, urged the customers to pay their electricity bills for the growth of the power industry and the economy.

Nigerians, he lamented, only pay for 40 per cent of electricity supplied, a situation, he admits, creates grave financial constraints for the entire value chain.

While attempting a comparative analysis of what obtains within the continent, he said Chad has the highest tariff, while Zambia has the lowest followed by Nigeria.

According to Oduntan, of the new tariff, 60 per cent of the total money collected goes to the generation companies that in turn, pay the gas suppliers, while 11 per cent goes to the transmission company, four per cent to the regulator, bulk trader and market operator.

Organised labour will not be persuaded

Alarmed by what it described as illegality of the new electricity policy regime, the Nigeria Labour Congress, NLC, Trade Union Congress of Nigeria, TUC, alongside civil society allies would not be persuaded by what they described as unwarranted tariff increase.

In a statement signed by Mr. Ayuba Wabba, President of NLC, labour decried what it described as the 45 per cent increase in the electricity tariff as announced by NERC.

Expectedly, the organised labour picketed all offices of the DISCOs, GENCOs, nationwide and the office of the NERC as planned,

Giving reasons for the protest, labour said: “The due process in the extant laws for such increment was not followed in consonance with section 76 of the Power Sector Reform Act, 2005.

“There has been no significant improvement in service delivery. Moreover, the fact is that most consumers are not metered in accordance with the signed privatisation Memorandum of Understanding, MOU, of November 1, 2013, which stipulates that within 18 months gestation period, all consumers are to be metered.”

In the statement which reads in part, the NLC leader said: “This protest rally has become necessary after all effort to make NERC shelve the idea of increase failed. Indeed, rather than see reason with Nigerians, the Minister of Power, Works and Housing has been advancing spurious arguments in justification.”

A human rights lawyer, Bar. Toluwani Yemi-Adebiyi had approached the Federal High Court to charge the management of the electricity distribution companies and the NERC for contempt of court.

Expatiating, he said: “The power sector has illogically taken the bull by the horn by contemptuously increasing the electricity tariff, in spite of the subsisting Order of Court not to bring any Increment until the Substantive Suit is determined.”

The activist lawyer who said the plaintiffs were guilty as charged. “Form 48, Notice of disobedience of Court Order had been filed. Filing of Form 49 in Conjunction with Order 35 of the Federal High Court will follow thereafter,” he said.

In a supporting affidavit, the plaintiff said despite NERC’s mission of “keeping the light on and to meet the needs of Nigeria for safe, adequate, reliable and affordable electricity,” most communities do not get more than 30 minutes of electricity supply daily.

“Poor masses are paying an estimated and indiscriminate bills ranging from N5, 000 to N18, 000, while spending an average of N15, 000 to N20, 000 for fuel to maintain generating sets weekly. Businesses have collapsed, industries have closed down, and residents cannot sleep comfortably at night due to inefficiency of our power industry.

“Companies and commercial houses are groaning under throat-cutting power bills which they are paying for, yet not getting the benefits of such payment,” Adebiyi stated.

But NERC’s lawyer, Chief Anthony Idigbe (SAN), said he had filed an appeal against the order by Justice Idris.

He said he also had a pending application for stay of proceedings pending determination of the appeal.

But Idigbe said the application for stay of proceedings should take precedence since an appeal has been lodged.

Ruling, Justice Idris said after a careful examination of the records of court, there were a number of pending applications to be dispensed with.

Justice Idris said: “I understand it to be the law that contempt proceedings are criminal in nature and should therefore ordinarily in the context of our jurisprudence be first dealt with either by the court trying the case when the alleged contempt took place or by another court.

“The purpose of taking contempt proceedings first is to demonstrate to the public that the court being the creation of the Constitution to decide cases between all manners of litigants vide Section 6 of the Constitution should protect its dignity and will neither allow a citizen nor any other arm of government to brazenly do an act that will diminish the powers duly invested by the Constitution and the common law in the administration of justice.

“On the other hand, the basis upon which the contempt application is premised, which is the order that parties maintain status quo ante-bellum, is on appeal, and there is a motion for stay of proceedings in this suit pending appeal.

“It is in the interest of justice, therefore, that this application to stay further proceedings be heard and determined. Until then, no further proceedings should go on. I will, therefore, take arguments on the application to stay further proceedings in this suit.”

 

Shape of things to come

In what appears to be a groundswell of support, the Senate had last Tuesday mandated the NERC to halt the 45 percent tariff increase being implemented by electricity distribution companies.

This development was as a result of the deadlock in discussions between the Senate leadership and the Minister of Power, Works and Housing, Babatunde Fashola and his counterpart in the Labour and Employment ministry, Dr. Chris Ngige.

The Nation gathered that the upper legislative chamber had asked the NERC to maintain the status quo pending the outcome of further deliberations with the ministers.

The motion to suspend the implementation of the new tariff which came was moved by Senator Suleiman Nazif (APC, Bauchi).

Echoing similar sentiments, Deputy Senate President, Ike Ekweremadu, said Nigerians were already on life support and urged his colleagues to reject the new increment and stand with Nigerians.

Several other speakers, including Senator Dino Melaye, urged lawmakers to look beyond the suspension of the new tariff regime.

Melaye said, “This increase makes it the fourth time that electricity tariffs will be up after the privatisation of the power sector. Their excuse has always been that they want to improve on the electricity. There was a time that the government gave loans to distribution and generation companies to buy metres and give to customers. They are yet to pay back that loan.

Expectedly, Senate President, Bukola Saraki mandated the Senate Committees on Labour and Power to meet with the relevant agencies of government with the view to finding a lasting solution after public hearings on the matter.

Meanwhile, the NLC may have commenced the process of compelling the NERC to reverse the recent increase in electricity tariff.

Comrade Wabba in a statement made available to The Nation in Abuja said:”We wish to assure all Nigerians that we are focused on the main objective of our campaign to ensure that the tariff increase does not stand.”

But it does appear the federal government has already considered the new policy regime as a fait accompli judging by the preparedness DISCOs to go ahead with the implementation.

But will Nigerians have to pay more for electricity, or will labour succeed in making the DISCOs bring down the price of the product Nigerians hardly enjoy?

So, between labour and the DISCOs who will back down, or will there be a middle ground?

Time will tell.

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