…Says Nigerians should stop obstructing tariff reviews
18 July 2017, Sweetcrude, Lagos – The Minister of Power, Works and Housing, Mr. Babatunde Fashola, has said that he is not responsible for fixing of electricity tariffs used by the Distribution Companies, Discos.
He made the statement in a statement on Tuesday.
The Minister had reacted to reports that he had an input on how much electricity customers pay as tariffs.
“We must all recognise and accept that tariff is a cost that we must all pay to keep the value chain viable as a business. It is measured by meters (which I will come to) but every consumer must pay. It is a criminal offence in Nigeria and all over the civilised world to use public electricity and not pay for it”, he said
“Tariff is not fixed by the Minister. I have no such power. Tariff is proposed by the Discos after consultation with their customers, and then approved by NERC (the Nigerian Electric Regulatory Commission) during a major tariff review”, he added.
He explained that the process of determining tariff takes into consideration the amount of power, the number of consumers on record who will pay it, the cost of producing and transporting power, operating cost of the operators, exchange rate, inflation and interest rate; and the tariff for each class of consumer is determined.
The classes of consumers are Residential R1, R2, R3 and Maximum Demand (MD). The tariff of each class is different in their DisCo while the tariff of R2, R3 and M are different from Disco to Disco.
It is only R1 that has a fixed tariff of N4 per/kwh across all DisCos and “it was not changed in the last tariff review, he said.
“The 2015 tariff review gave us a 10-year tariff that should be declining as the sector stabilizes. It provides for a major review after 5 years, and minor reviews every 6 (SIX) months to keep the market abreast of the economic realities of foreign exchange, gas price, and inflation changes”, the minister added.
He said that if Nigerians wants to experience reliable electricity, “we must accept the reality of tariffs and possible upward or downward reviews”. “We must stop going to court to get injunctions to stop tariff reviews. We don’t do so, when exchange rate, inflation and prices of other commodities change. The Court of Appeal has reversed the decision of the Federal High Court which stopped the implementation of the last tariff review”, he said.
According to him, what customers should insist on, is provision of meters in order to monitor and control what is consumed.
He also advised government to quit interfering with the power of the regulator when it fixes tariff.
According to Fashola, interfering with the power of NERC in the way the last administration ordered a reversal of tariff in order to win electoral votes in 2014, is wrong”.
“It created a massive debt for Nigeria, because while the Government ordered a reversal of Tariff, it did not reduce Exchange Rate, Interest Rate , cost of wages or cost of gas and other inputs necessary to produce power”, he explained.