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No to increase in electricity tariffs

By Editorial Board
19 October 2015   |   3:14 am
THE demand, the other day, by the House of Representatives that the proposed increase in electricity charges be stopped is both timely and justified.

powerTHE demand, the other day, by the House of Representatives that the proposed increase in electricity charges be stopped is both timely and justified. There is no reason for such an increase until the distribution companies (Discos) improve their services and address the many complaints against them by both consumers and the National Electricity Regulatory Commission (NERC).

Prominent among the complaints against the Discos is the arbitrary imposition of consumption charges that are not just high but unreasonably so. From Abuja through Kaduna to Lagos, there is hardly a Disco that has not been picketed by angry consumers because the companies have stopped reading perfectly functioning electricity meters. Instead, the Discos literally prepare bills according to their whims, but essentially to sustain projected revenue, for which they have not provided service.

The point cannot be over-emphasised that, from the way the  electricity companies –generating, transmitting, and  distributing – have carried on since they took over the  respective sectors of power supply, these  organisations have shown they are ill-prepared  for the task that they accepted and indeed paid  substantial sums of money for. And to date, they have not proven their capability to manage their businesses in line with international best practices. This is hardly surprising. The managing director of a Disco is reported to have said that he and his colleagues did not have the opportunity to study the system before taking it over. Also, the Managing Director of Nigerian gas Company, Saidu Mohammed reportedly told the House of Representatives committee on gas that  several independent power plants were already completed before the owners began talks on the supply of gas to drive them. These surely do not signpost the best of business plans.

Power supply remains abysmally inadequate and erratic, improving only marginally, and in fits and starts.  Worse still,  the new private operators have resorted to literally reaping where they have not sowed by sending prohibitive bills to hapless consumers who must therefore abandon their work and businesses to seek clarification or march in protest against what is patently an attempt to defraud them.  Furthermore, the companies have sustained a so-called fixed charge that extracts money from consumers as monthly payment for an installed meter which by the way, the consumer paid for in the first place; directly or otherwise. Not surprisingly, the NERC has been busy keeping them in line with the terms and conditions of the purchase of their respective facilities, besides having to, every so often, settle disagreement with aggrieved consumers.

Customers have received no satisfactory explanation for these bills; and those who protest are simply told to pay first or be disconnected. Despite the assurances of the Discos on delivery of pre-paid meters, consumers are yet to feel the impact, as the processes seem to take eternity. That the Discos are having a problem with the procurement and distribution of pre-paid meters is indeed strange and suspicious, because as much as N2.9 billion  in Multi-Year Tariff Order I was reportedly released, as subsidy by government , as far back as 2012,  to procure meters. What did these companies do with the money?  Second, a local company that manufactures these meters claimed that its warehouse is full to the brim with unsold meters. The firm has even threatened to shut down and lay workers off if it cannot sell its product which, by reasonable expectation, the Discos should pick up. Government directed the Discos to do so but it does appear they have not.  Third, early this year, the Central Bank of Nigeria (CBN) gave a N39.527 billion loan to the four electricity generation  companies and others to, in the words of  the CBN governor, ‘catalyse the  power sector [including ] the procurement of … equipment  and metering… which  should  ultimately impact on the economy of Nigeria.’ It is to be repaid in 10 years at 10 per cent annual interest. Again, what have the beneficiaries of this public funding done with the money?

These reasons and more justify periodic performance audit of these electricity companies in order to protect public fund as well as keep them on their toes. Going by experience in the telecommunication sector, the pre-paid billing mechanism would be most convenient for both service providers and consumers.

The new operators of the power sector have so far failed in expectations of improved and fairly priced power supply; they are giving an unwholesome name to the private sector’s reputation for ethical management and efficient performance. Their poor performance tends to lend credence to suggestions by some persons that government should take back control of the sector. The arrogance with which these power companies behave is unbecoming of responsible corporate practice, and is unacceptable. This is hardly a respectable way to do business.

The Discos must not be allowed to continue to violate the rights of consumers, contrary to well known rules of ethical business conduct, and with so much disrespect for regulatory bodies. The NERC’s mechanism through which dissatisfied customers can seek redress is instructive and should be strictly enforced. The power companies should cue into the mood of the public, which is intolerant of business-as-usual attitude.

5 Comments

  • Author’s gravatar

    The same Guardian that severally, through their Editorial comments celebrated the privatization of the power sector has suddenly found reasons to join Nigerians in calling for the heads of the power utility owners across the country, to do the needful. Which ever way we look at what is happening right now with the sector, Nigeria and indeed Nigerians are at losers, because the sector was not actually privatized but merely allocated amongst the power that be by the former regime. The nation does not have competent private investors that can invest in the power sector to bring about the desired turn around. All that is needed now is for government takeover. That way we have some respite and get the nation out of the mess created by privatization of the power sector.

  • Author’s gravatar

    Privatization is the best way to handle the power sector, there is a great advantages than disadvantages on privatization. The Discos are only abusing the consumers by charging high electric tariff, non reading of meters, poor electricity supply and non provision of prepaid meters. It is the roles of NERC to regulate, monitor closely and sanction poor performance and conducts by the Discos. FG should continue to invest and complete several power projects across the nation. God bless Nigeria.

  • Author’s gravatar

    The problem with our power industry is two fold. one, the lack of adequate gas supply. This is due to both lack of payment for gas supplied, and vandalism. Two, we have a useless and weak regulators who for so long was in bed with the power companies. To accurate bill, provide and reduce theft of electricity, DISCOS needed to meter the nations. NERC failed in mandating this meters and have not taken step to solve the problem. here is a solution, mandate discos to meter all consumer that have paid for meter within a month. Those meter should be gotten from local sources. any disco that fails to do so, would be fined heavily, and NERC would install those meter at a huge cost to the discos. alternatively NERC can immediately start installing the locally produce meters in electricity consumer house or business. And then bill the Disco’s for this services. everything comes down to having effective regulators, NCC is an effective regulator that has push Nigeria telecommunication to the place it is right now.

  • Author’s gravatar

    The real issue with the Power Sector is the NERC as a supervisory body. From the start the NERC made it their obligatory duty to justify and explain every move to raise the3 electricity tariff by the Discos, that was and still is wrong.
    The latest outrage was -as explained by the NERC Executive- a that there was an improvement in the Generation hence Nigerians have to pay more. What a weird logic this is.
    Whatever increase -marginal and real- there is to generation shouldn’t and must not mean consumers have to pay more to the Discos, no. There exists a colossal leakage -loss of power- from the Generation to the Transmission and the Companies have done little or nothing to remedy that; yet the NERC uses that to justify billing Nigerian Consumers for a ghost supply. Yes a ghost supply because the Discos cannot guarantee electricity to any Nigerian consumer for a specific time at any day. Foe Nigerians to pay more, there has be a very significant stable supply with predictable time periods first not this pay-more-to-have -more parasitic nuisance promoted by the NERC.

    • Author’s gravatar

      Should the average Nigerian not be able to calculate his own electricity consumption and thus be able to anticipate his bill at the end of a one month period?
      The thing is this, the average Nigerian household does not consume much electricity as the DISCOs would have us believe.

      You go to a shop, you pick all the items you want to buy. On getting to the cashier, you are asked to pay for the cash register (or calculator) and the scanner, before you are billed for the goods you bought. Then you are billed 3 times what you picked and told that it’s because you look well dressed! THIS IS EXACTLY WHAT THE DISCOs ARE DOING TO NIGERIANS AND NERC IS THEIR ADVOCATE!