New regulation for estimated billing ready next month
• No immediate increase in electricity tariff, NERC insists
• ‘DisCos will enforce new tariff from April’
A new regulation to enforce metering for electricity consumers will be ready next month, according to the Chairman of the Nigerian Electricity Regulatory Commission (NERC), Prof. James Momoh. This is a fresh move by the regulatory agency to stop electricity distribution companies (DisCos) from fleecing their customers through the current regime of estimated billing.
Momoh, who gave the hint during a media briefing in Abuja, insisted that there would be no immediate increase in electricity tariffs, stressing that the commission was working to ensure that electricity distribution companies (DisCos) provide meters to consumers.
He said: “Failure to do so, we have a backup plan, which is one of our regulations that will be out in about a month, called ‘Clapping’ which is going to put a maximum amount DisCos can charge customers.
“For DisCos, it will be an advantage for them to provide meters as this is an attempt to make sure that the win-win customers are metered. We want DisCos to provide them with meters because the minimum we are going to allow them to charge is not going to be to their advantage in the long run.”
There had been a public outcry by stakeholders who argued that the proposed tariff increase, as published by the commission, was not only unacceptable, but would trigger inflation, worsen poverty and affect other economic indexes, amid epileptic power supply.
“There is no immediate increase in tariff for customers. As a regulator, we have been mandated to review the proposed tariff twice a year. We did the first one around June and we have no other option, but to do our job.
“We have done the review and it is subject to public consultation. In the next three months, the commission will be going from place to place to engage stakeholders for consultation.
“The other is a communication of what we have done to increase or reduce tariff. If at the end of our meetings, we decide that there will be no increase, it will be so. If there will be increase, it will be based on our engagement at the public forums,” he clarified.
A new Minor Review of the Multi-Year Tariff Order (MYTO) 2015 and the Minimum Remittance Order (MRO) for 2020 published by NERC had on Saturday revealed that electricity consumers in Nigeria would pay more tariff from April this year.
Reacting, the President of the Nigeria Consumer Protection Network (NCPC), Kunle Olubiyo, said as long as emphasis was on increase in tariffs without a corresponding increase in collection and revenue efficiencies as well as a sustained increase in improved quality of services and load rejections, the sector would remain stagnant. He noted further that the country must equally address liquidity crises and poor cash inflow, as core investors have refused to invest adequately in operational thresholds and network improvement.
Prof. Adeola Adenikinju, Director, Centre for Petroleum, Energy Economics and Law (CPEEL), University of Ibadan, said: “Tariff increase should not be used as a means to transfer the inefficiency in the system to electricity consumers. What is NERC doing about getting meters to all willing consumers? What about consumers’ enumeration, to enable the regulator derive the appropriate denominator used in estimating the MYTO? What about the high transmission and distribution losses that are now being loaded on to the consumers?
“If these and other problems are not quickly addressed, high tariffs would simply perpetuate monopoly inefficiency, payment evasion by consumers and continued high economic losses. We must confront the sector’s problems in a holistic manner. Piece meal approach is not sufficient.”
On his part, Segun Ajibola, a former Chairman of Council, Chartered Institute of Bankers of Nigeria and Dean, College of Postgraduate Studies, Caleb University, referred to the development as the line of least resistance.
He asked: “What has happened to the promised increase in power supply to the homes of Nigerians? If care is not taken, 2020 would increase substantially the economic misery index of Nigerians.”
This was as the Association of Nigerian Electricity Distribution Companies (ANED) yesterday maintained that the DisCos would enforce the new tariff from April 1.
Sunday Oduntan, ANED’s Director, Research and Advocacy, disclosed this in a statement in Abuja, saying: “We state emphatically that there shall be no change or increase in the existing electricity tariff until April 1, when the new adjusted tariffs shall begin to gradually reflect the dynamism of our macro-economy.”
He added: “The tariffs anticipate changes in the currency exchange rates between the United States and Nigeria and changes in the rate of inflation and gas prices. It is our hope that this explanation substantially clarifies the accurate position and allays any fears and concerns our esteemed customers may have.”
Meanwhile, the Director-General, Nigeria Employers’ Consultative Association (NECA), Timothy Olawale, said the proposed hike in tariff was “a necessity in order to get the power sector back on track.”
According to him, “While customers have said the tariff review should only take place after there has been improvement in service, service providers have said for service to improve, the right amount has to be paid.
“The argument has always been cyclical. But putting the matter in context, the issue of the increase is intended to enable the sector to realise what can be described as the right price for the product. It is with this that more investment can be attracted and consequently, service improved.”
Urging the DisCos to justify the proposed tariff hike, Olawale said consumers and businesses were not opposed to paying the appropriate price for electricity consumed. He noted that the major contention had been estimated and sometimes outrageous billing for power not consumed, with implication for the cost of living and cost of doing business without a guarantee of commensurate improvement in the quality of service.
“The DisCos would do well to fast-track the provision of prepaid metres, the GenCos should ensure the availability of power for the DisCos to distribute, and government should support the DisCos to curb the rampant incidences of electricity theft across the nation,” he added.
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