Facebook Twitter SMS WhatsApp
You are here : Home » Business » Energy »
No justification for electricity tariff hike – Stakeholders
October 27, 2015 at 6:49 am in Energy , News
By Ediri Ejoh
NIGERIANS have been thrown into confusion over whose authority
supersedes on the issue of electricity tariff increase. No sooner than
President Muhammadu Buhari, assured Nigerians that there will be no hike
until supply improved significantly, than the Nigerian Electricity Regulatory
Commission, NERC, last week declared a new tariff regime effective from
November 1.
Stakeholders note
that the new tariff is
more than 40 percent
higher than the
current levels and will
be the second time in
nine months, even as
there has been no
significant
improvement in the
electricity supply
situation in the
country.
While some consumers admit to better supply in some locations, majority
however, insist that the situation is even worse than before, as they enjoy
the scarce commodity only for a few hours late into the night, when it is
really of no use to them.
No justification: Reacting to the development, an advocacy group, Nigerian
Electricity Consumers Advocacy, NECAN, said the recent “consultations” on
tariff carried out by electricity distribution companies, DISCOS, were a mere
trick to justify tariff hike.
According to NECAN President, Mr. Tomi Akingbogun, “We believe NERC is
allowing the public to be over billed by allowing the DISCOs justify the
increases. Otherwise, how can it be explained NERC allowed a tariff hike of
12.5 to 48 percent in January, and allowing same percent in October of that
same year?
“NERC has allowed the DISCOs to take advantage of everyone and had
changed the rules at will thereby breaking all the rules. The condition given
to them was to ensure that customers are metered before complaining of
losses.” He therefore called on the President Buhari to keep his promises to
Nigerians and discourage the exploitation by the DISCos.
Costs evaluation: Also commenting, the Director General, Lagos Chambers of
Commerce and Industry, LCCI, Mr. Muda Yusuf, said the proposed upward
review in electricity tariff at this time is worrisome, as consumers should not
be made to pay for inefficiency or corruption costs.
His words: “It is important to evaluate the elements of the current costs
especially the integrity of procurement processes and other operational
expenditure under the current dispensation. The risk of bloated costs is
typically high with such enterprises, especially as they operate in a monopolistic environment.
“Pricing is only one component (although fundamental) in the power reform
process. There are other issues such as the gas availability, security of gas
infrastructure, adequacy of investment in gas infrastructure, security and
adequacy of the transmission lines, and the general framework to mitigate
the risk of investment in the sector.
“The problem of outrageous billing is yet to be addressed. The commitment
to the provision of meters for electricity consumers to ensure fair billing is
inadequate. A vast majority of consumers still have no meters.
Inadequaciesin billing
Yet this is fundamental to a good relationship between the power firms and
their customers. Many consumers feel exploited at this time because of the
inadequacies in billing. The contentious fixed charge is still in place. “It is
heart rending that the choice of locations of many of the Independent Power
Projects, IPPs, was informed more by politics than the economics of power
generation.
“Access to a major input in power generation, which is gas, was not
sufficiently taken into account. This reality has badly affected the cost
profile of the IPP projects. All these are complications and challenges on the
path of the power sector productivity,” he maintained.
Breaking the law: According to Section. 76 of the Electric Power Sector
Reform Act. MYTO 1.0 states that there will be no increase until 2017, and
only 5% will be allowed. DISCOs were given two years to meter all
customers. But they refused saying there was no money. Grant was given
them, they refused to access it.
Alternatively, customers were asked to fund meter purchase and be refunded
from their bills. But for three to four years or more down the line, nothing
has been done to that effect. The law does not recognise estimated billing.
NERC should stop the practice, but instead it allows it on the excuse that
DISCOs must make profit.
Presently, only about 40 percent electricity users are metered. How does
NERC want the DISCOs to make profit from the 40% customers captured?
This is the question begging for answer if the plan is not to allow them
make super profits before metering everyone.
No valid basis for hike: Against this backdrop, the Nigerian Association for
Energy Economics, NAEE, condemned attempts by the DISCOs and NERC to
increase electricity tariffs, saying that there is no valid and empirical basis
for any sort of increase.
by ROTMANLUV 2023-07-08, 17:34
