Electricity tariff: Enough of politics

By reputation, the Senate of the Federal Republic of Nigeria is not famous for swift and timely delivery of its constitutional responsibilities. However, it would seem that when the business at hand is to take-down one policy or the other which the President Muhammadu Buhari-led Executive rolls out to actualise its Change Agenda, the upper chamber of the Legislature somehow finds the capacity to rev up its lethargic pace into high drive. Witness the rapidity with which the Senate issued a reversal order on the take-off of the National Electricity Regulatory Commission (NERC) Multi-Year Tariff Order 2015 (MYTO 2015) last month.

It was one needless “popularist” intervention which, from all indications, was probably designed to provoke public discontent against the Buhari administration and to portray the Executive as anti-people. Unfortunately, the interference has come at a time when a preponderant concentration of efforts by all and sundry- especially all the arms of government – is needed to support and provide a conducive environment for a highly credible administration with integrity of purpose and patriotic zeal, to fix what has remained an intractable problem and national embarrassment.

The issue of energy tariff is undoubtedly touchy, especially in a country where the challenges of regular power supply continue to seem insurmountable. Since it became part of the power lexicon here in 2008, MYTO – which is a methodology for determining the prices that consumers will pay for electricity and is based on the revenue needs of the entire power sector over its validity period – has undergone reviews five times.

This high tariff revision and reassessment frequency was understandably troubling for investors due to the pressure of revenue uncertainty. The consequential erosion of investor confidence arising from the reviews is deemed unhealthy for the power sector in the long term, crippling generation and transmission targets.

The undesirability of the frequent tariff reviews must have driven the NERC and other stakeholders to proffer a 10-year validity period for MYTO 2015. According to NERC, MYTO 2015 would run from February 2015 till December 2024. Whist the generality of the public has little or no inkling about what goes into determining the new electricity tariff, NERC had hearkened to public outcry by removing fixed charges from electricity bills. Still, even during the best of times, an upward tariff review for services is bound to elicit considerable angst from labour and other interest groups. The pervasive malfeasance associated with the immediate past administration, which commenced full implementation of the MYTO pricing regime, did not help matters, and this must have deepened public distrust about its reasonableness and equity.

Ekweremadu’s position was popularist, appealing to the basic emotions of the Nigerian public in an obvious quest to pillory a statutory agency, or more precisely, the Executive arm, which was only acting within its powers. Interestingly, those powers were conferred on NERC in the first place by a law passed by the National Assembly: the 2005 Electric Sector Reform Act. The law in question was a watershed in the long quest to wrestle the beleaguered power sector from the grip of cabals and saboteurs motivated by unbridled greed.

According to some commentators on the issue, market priced tariffs like MYTO 2015, are fundamental covenants of the agreements between DISCOS and the Bureau for Public Enterprises which represented the Federal Government. By suspending the implementation of MYTO 2015, the Senate, according to critics, would seem not to be bothered by the existence of the contractual obligations of Government or that the lawmakers were unaware of the contract details and the unwholesome implications that a breach of the contracts entail.

Expectedly, the Association of Nigerian Electricity Distributors (ANED), the umbrella body for DISCOS, has slammed the Senate’s tariffs reversal directive saying that “suspending the implementation of the new tariffs will leave us in continuous darkness, with diminished and no future prospects of growth of our economy.” The Association noted that the Senate’s action had raised “concern for the sanctity of contract.”

To be sure, the Senate is constitutionally empowered to execute oversight functions over the Executive but it is not a blanket legal approval and certainly not one to be used to undermine the principle of separation of powers between the three arms of government which underpins our democracy. As Bolaji Niniowo succinctly posited in his article “Electricity Tariff: Interrogating the Scope of the Senate’s Oversight Responsibility”, the oversight powers of the Senate over policies and directives as contained in section 88(2) of the Constitution, are “exercisable only for the purpose of enabling the National Assembly to make laws with respect to any matter within its legislative competence and correct any defects in existing laws; and to expose corruption, inefficiency or waste”.

In exercising these powers, the Senate obviously cannot summarily suspend the directives of NERC, an agency of government which was simply carrying out its statutory functions. What could be even more disturbing and unhealthy for good governance, especially in this era of the much needed “Change”, is the likelihood that this – as well as the Senate’s strange bickering about SystemSpecs’fees and the terms of the widely popular and effective Treasury Single Account (TSA) – is all about the Senate hiding behind the popularist toga of the defender of the masses’ interests, to distract or even embarrass the Executive.

The options open to the Senate whenever it disagrees with the decisions of the Executive or its agency are clear enough as the aforementioned article by Niniowo outlined: it can deploy the machinery of lawmaking very much in its control to outlaw such policies; limit the agency’s jurisdiction or leave the judicial arm to determine if procedural or legal provisions have been breached by the Executive or its agency. Already, one or two cases are pending in the courts on the new electricity tariff with a judge ordering a return to status quo on the matter pending the determination of a suit filed by a rights activist. That is consistent with democratic ethos and not the ill-informed and popularity-seeking reversal pronouncement by a Senate on measures by an agency of government acting within its statutory powers.

Should the Senate have its way on the implementation of the new market priced electricity tariff, electricity consumers may be denied the elimination of crazy or estimated billing, enjoyment of regular power supply for business and quality living as transmission facilities and infrastructures are adequately funded from market-priced tariff, cheaper electricity in the long term and elimination of consumer-funded repairs of transformers and other consumables as the DICOS will be financially positioned to stock the parts and materials in large quantities.

On a macro level, non-implementation of MYTO 2015 may cause Nigeria to miss a bold opportunity to achieve her dream of truly becoming a regional business hub with vastly improved power supply for the expansion of manufacturing and industry. It will be a disservice to good governance for the Senate to truncate the hope of Nigerians on the altar of unhealthy politicization.
Akanni, a Corporate Communications Consultant, writes from Lagos.