Friday, 2nd June 2023

Another looming hike in electricity tariff?

By Editorial Board
12 January 2020   |   3:55 am
A reported imminent hike in electricity tariff against widespread resentment by Nigerians smacks of gross insensitivity on the part of government to appreciate the high level...

Ikeja Electricity Distribution Company (IKEDC). Photo: NAIRAMETRICS

A reported imminent hike in electricity tariff against widespread resentment by Nigerians smacks of gross insensitivity on the part of government to appreciate the high level of poverty and suffering among the populace.

The outcry is even more considering that power supply is still epileptic and yet consumers are forced to pay exorbitant charges for electricity not supplied. This is akin to daylight robbery of the citizenry.

No doubt, electricity remains an albatross on Nigeria of which there seems to be no solution yet in sight. But rather than coming up with a workable strategy to end the electricity quagmire, the interest of government, at all times and against all odds, is on raising tariff. This is very unfortunate.

Although, a Federal High Court sitting in Lagos has reportedly ordered the electricity Distribution Companies (DisCos), not to hike electricity tariffs as recently announced by the Nigeria Electricity Regulatory Commission (NERC), pending the determination of a motion challenging it, it is not known how far this legal battle would go to bring succour to Nigerians.

At the hearing of a suit by the Incorporated Trustees of Human Rights Foundation against 15 respondents in the electricity industry, Justice Muslim Hassan ordered the parties to maintain the status quo.

The respondents include NERC, the Bureau of Public Enterprises (BPE), the Nigeria Bulk Electricity Trading Company Plc and the Minister of Power.
Also joined as respondents were Abuja, Benin, Enugu, Ikeja, Kaduna, Kano, Port Harcourt, Yola, Eko, Ibadan and Jos DisCos.

The group had filed an ex parte motion praying the court to stop the new tariff from coming into effect. It argued that, “It will amount to great injustice to impose arbitrary electricity tariff on Nigerian electricity consumers.”

The Senate’s plan to summon the Discos, Minister of Power Saleh Mamman, NERC Chairman James Momoh and other relevant stakeholders in the sector over the planned tariff hike is worthwhile. As the representatives of the people, the National Assembly should work to protect the interest of the people they represent.

The NERC had on December 31, 2019, directed the DisCos to raise their rates by over 70 per cent to enable them have enough capital to pay for electricity distributed by them.

But following a public outcry, NERC back-pedaled; promising that consultation with consumers and other stakeholders would be carried out to determine if or not the new rate would stand. It needs to be pointed out that the Multi Year Tariff Order (MYTO) upon which NERC based the latest hike has not been implemented in the public interest. MYTO presumed that electricity supply would steadily rise, which would necessitate periodic review of tariff. But rather than improve, the power supply situation has been on the decrease, yet the tariff is frequently reviewed based on MYTO.

For instance, NERC based the present hike in electricity on MYTO 2015 and the Minimum Remittance Order (MRO) for 2020. While poor services persist, NERC has continued to raise tariff surreptitiously not minding the negative impact on Nigerians. There is no competition among the various DisCos. There are alternative sources of energy that are not being exploited to boost power supply.

Nigerians should not be exploited under any guise. What is currently being paid is not commensurate with supply, which is low.

It is unfortunate that the power sector was sold to dubious parties. There is no investment in any aspect of power supply infrastructure. The terms of engagement are not clear. It is not clear who should do what even as governments continue to give bailout funds without clear payment terms.

Government sold the sector to freeloaders. That is the problem we are having. The result is that services are not being provided. Rather than provide the necessary capital for investment, government has been bailing out the electricity companies.

On its own, government is not investing either. For instance, there is no investment on the decrepit national grid which government still owns about 50 per cent. Our national grid cannot carry power beyond the present low output according to experts. So, where do we go from there? Do we still need the national grid under the present circumstances?

Ideally, before any increase in tariff is made, the necessary infrastructure should be put in place and services improved. But this is not happening. The focus is on tariff and not on service improvement. There are no pre-paid meters for majority of consumers. The tariff is still charged based on outrageous estimated bill.

Given the wobbly energy situation in Nigeria, what we need is energy democracy. This means devolution of power supply. Companies, individuals and regions that can invest in the power sector should be permitted to generate power for use and sale to interested consumers. The time to rethink the power supply, generation and distribution is now. It is government that started this mess; the same government should clear it. Otherwise, the damage being done to the country as a result of poor electricity is unquantifiable. The situation should not be allowed to continue. Electricity supply is too important to be trifled with the way we have been doing. The starting point is democratisation. The relevant laws should be amended to reflect this reform.