In spite of NERC rebuttal, Nigerians to pay more for electricity
By Oludare Mayowa
“Until the government ensures that consumers are not burdened with investment in power infrastructure, which invariably the Discos will take over as their own, its reform in the sector will remain a sham.”
The Nigerian Electricity Regulatory Commission (NERC) on Wednesday released a statement denying the approval of an increase in electricity tariff by the government in an attempt to damp outrage by the public against the capitulations by the government to pressure from the World Bank to erase subsidies in the country.
The power regulatory agency said in a statement that: “No tariff raise for poor and vulnerable Nigerians; DisCos directed to embark on mass metering.”
In a statement, the Chairman of NERC, James Momoh said; “tariff reviews going forward will only follow service-based principles. Under these service-based principles, DISCOs will only be able to review tariff rates for customers when they consult with customers, commit to increasing the number of hours of supply per day and quality of service.”
The commission said “In all cases poor and vulnerable Nigerians will not experience any increase. In line with these expectations, DISCOs are directed to engage with their customers on a Service Based Tariff structure.”
According to the commission, under the Service Based Tariff Structure, DISCOs can only review tariffs for customers under the following conditions, when customers are consulted and communicated a guaranteed level of electricity service by the DISCOs based on hours of supply and no estimated billing through the strict enforcement of the capping regulation.
“This means that unmetered customers will not experience any cost increase beyond what is chargeable to metered customers in the same area. Even under the above conditions, there will be no change in tariff for the most vulnerable as tariffs for those consuming 50KW or less remain frozen.
“Customers receiving less than 12 hours of supply will also not experience any change in tariffs. In addition, the President has directed that there should be a nationwide mass metering program in an effort by the Federal Government to put a stop to estimated and arbitrary billing for electricity. He has also approved a waiver of the import levy on meters so that those that do not have meters can be supplied as early as possible at reasonable costs,” NERC stated in the statement.
It urged the public and all stakeholders in the power sector are by this statement urged to disregard any reports of an arbitrary tariff increase affecting Nigerians.
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However, this has not allayed the fear of consumers over the report that the government has approved an increase in electricity tariff in the country, which is expected to take effect from September 1, this year.
The impending increase in tariff may add to the woes of Nigerians as statistics showed that the economy is in a downward spiral with inflations rising daily while the unemployment rates keep growing.
Reports from the National Bureau of Statistics (NBS) on Monday showed that the country’s Gross Domestic Product (GDP) declined by 6.1 percent in the first quarter of the year.
The NBS report said the economic decline was due to “the domestic efforts ranged from initial restrictions of human and vehicular movement implemented in only a few states to a nationwide curfew, bans on domestic and international travel, closure of schools and markets etc., affecting both local and international trade. The efforts, led by both the Federal and State governments, evolved over the course of the quarter and persisted throughout.”
Also, the Manufacturing Purchasing Manager’s Index (PMI) just released showed that the August index fell by 48.5 index points, according to the latest the Central Bank of Nigeria (CBN) report, reflecting a continuous decline in productivities in the economy and the impact of dollar shortage on productions.
The inflation rate figure in July showed that consumers are paying more for goods and services across the value chain, reflecting a decline in the standard of living of average Nigerians.
The inflation rate rose 12.82 percent year-on-year in July 2020, compared with 12.56 percent in the previous month, the NBS stated in its report.
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The rise in the inflation rate was attributed to increases in prices of Bread and cereals, Potatoes, yam and other tubers, Meat, Fruits, Oils and fats, and Fish, indicating that Nigerians are paying more to feed themselves.
Only a month early, the government had approved an increase in the cost of pump prices of petrol, attributing this to the recovery in the global crude oil prices. The increased in pump prices of fuel is part of the contributing factor to the increase in food index as costs of transportations and commuting also jump in tandem.
It is a shame that Nigeria, the eight world largest crude producer could not boost of one functional petroleum product refinery, thereby depending on importing all products consumed in the country.
Nigeria has been trying to obtain about $1.5 billion credit from the World Bank to help it finance part of this year’s revised budget but the Bretton Wood institute has insisted that the country must remove all subsidies before it could look at the request.
In fulfilling the conditions of the World Bank, President Mohammadu Buhari administration has gradually introduced more market reflective pricing on hitherto subsidised goods and services.
The CBN has also devalued the naira twice this year by more than 18 percent as part of efforts to comply with the World Bank conditions to abolish multiple exchange rate window and allow market forces to determine the rate of exchange of the local currency.
In ordinary terms, the measures adopted by the government to reflect market mechanisms in the pricing of services and the exchange rate may be seen as the right way to go to eliminate corruption and ensure transparency in government business.
However, a cursory look at the measures will show that many Nigerians will suffer from the fall out from the measures and prices of goods and services will skyrocket while more Nigerians will further drop below the proverbial poverty line.
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Unfortunately, the country’s elites have devised their own means of circumventing the rules and have continued to enjoy unhindered subsidy through government grants, corruption and other exploitative measures to the detriment of the poor masses.
The planned increase in electricity tariff will continue to worsen the conditions of Nigerians because in spite of the huge resources committed into the revamping of the power sector, the power supply has not significantly improved as a result of corruption and mismanagement in the sector.
Power supply remains abysmal while the electricity regulatory body looked the other way while the distributions companies exploit consumers as a huge gap exists between metered customers and estimated billing for the unmetered section of the society.
The government must as a matter of urgency enforce its rules on the compulsory metering of consumers by the discos to reduce exploitation of consumers, otherwise, the effect of the upward review of the tariff may be dire on the masses.
Weak regulation and lack of transparency in the management of the country’s power sector have resulted in the shambolic situation of the sector and leave the consumers to hold the short end of the stick.
For instance, in spite of complaints by consumers on the estimated and crazy bills, the regulatory commission has not been effective in melting our appropriate sanctions on erring Discos, leaving consumers at the mercy of the electricity distribution companies.
Recently, residents of the Journalists Estate in Arepo, Ogun State have to cough out over N3.5 million to purchase a transformer to stabilise electricity supply within the area, yet the privatly-owned distributions companies will continue to lay claims on the ownership of this power infrastructure and charge residents inappropriate tariff for power supply.
The NERC has not been able to ensure that power distributions company invest more of their own money to improve infrastructure to boost power supply to various communities.
Until the government ensures that consumers are not burdened with investment in power infrastructure, which invariably the Discos will take over as their own, its reform in the sector will remain a sham.