Consumers Reject 40 Percent Electricity Tariff Hike

The move by the Nigerian Electricity Regulatory Commission (NERC) to increase electricity tariff  in November 2015, by over 40 percent is unsettling for consumers in the country. While many people said such increase is a way of making Nigerians pay more for what they are not consuming with estimated bills, others expressed displeasure about the plan by NERC to increase tariff without meeting with relevant stakeholders and consumers to discuss the modalities.

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The proposed increase according to NERC would be between 21 per cent and 49.4 per cent. For commercial consumers, the tariff hike is by 21 percent, while residential consumers will pay 49.9 per cent more. The new tariff according to electricity distribution companies would cover increase in the price of gas supply and the cost of power distribution to customers in different areas.

Also, the power companies are seeking increase in tariff across different parts of the country, in order to improve their margin. For instance, the statistics released by the companies’  shows that the rate of increase needed to improve their margin should be 21 percent for commercial consumers, which covers those doing businesses, 49.4 percent for residential consumers, depending on the location. Other places include Abuja, Benin, Enugu, Jos and Ibadan, where the distribution companies proposed  increase of 48 per cent, 61 per cent, 60 per cent, 63 per cent and 56 per cent.

 

For Ikeja, Kano, Port Harcourt and Yola, the companies proposed 32 per cent, 40 per cent, 46 per cent and 83 per cent increase in tariff.  Also, the  commercial consumers, in Enugu are to pay 56.53 per cent increase in the commercial tariff category,  Jos, 30.01 per cent, Ibadan, 18.64 per cent,  Ikeja, 25.02 per cent, Kano 46.93 per cent, Port Harcourt, 10.99 per cent, Yola, 43.16 per cent and five percent increase for consumers under Eko Disco distribution area.

When Sunday Vanguard visited the secretariat of Manufacturers Association of Nigeria (MAN) at Ikeja, Lagos, to get reactions on the proposed increase in power tariff, many manufacturers said it was not right for NERC to propose another increase in electricity tariff without giving consumers prepaid meters for them to know the exact amount of electricity they consume every month.

In a chat with Sunday Vanguard, the President, South/South Chamber of Commerce, Mr, Billy Harry, said that NERC ought to have a meeting with relevant stakeholders and consumers of electricity in the country before proposing increase in tariff.

He stressed, “How much is the cost of electricity per Mega Watt (MW)? What is the degree of efficiency in power supply? What ratio of increase is appropriate? It is true that power generation, transmission and distribution companies need certain level of profits to stay afloat in the business, but NERC waking up to increasing electricity tariff without meeting with stakeholders in the country to discuss the modalities is not the best thing to do. They should do wide consultation with stakeholders before any increase.”

He added, “There are various platforms through which NERC could meet with stakeholders, manufacturers, entrepreneurs and consumers to discuss on what should be an appropriate increase in electricity tariff. For example, we have electricity consumers forum, MAN, Chambers of Commerce and other stakeholders that NERC should meet with, to analyse on acceptable and agreeable level of increase in tariff.”

He went on, “The areas that should be considered include, what are the basis for increase in electricity tariff? Is it only money that should be taken on assumption? Is it that power supply is stable now than before? So, it is imperative for the distribution companies to meet with stakeholders in the sector, to discuss on these areas before embarking on any increase in tariff. A situation where NERC proposes increase in electricity tariff without meeting with the stakeholders is not acceptable”.

However, despite privatisation of the Power Holding Company of Nigeria (PHCN) and injection of billions of Naira by the Federal Government into the sector, power crisis continues to linger. At the twilight of the last administration, government approved N18.26billion loans for five power companies to boost electricity supply, after approval of huge sums like N5.2billion for power infrastructure, N213 billion as intervention fund for power, N3.9billion for power transmission infrastructure and  N1.3 billion for manpower development and training of 3,700 trainees under the National Power Sector Apprenticeship Scheme (NAPSAS), all without commensurate output in electricity supply to the people.

The current electricity generation capacity in Nigeria with a population of over 160million stands between 4,000 and 5,000mw.   Epileptic power supply is said to be one of major factors militating against industrial development in Nigeria. In 2013, government promised to hit a target of 10,000mw generation capacity in December 2013, but it was not realisable. Government also said that N347 billion was needed for transmission to meet domestic and industrial consumption, yet the sector is still facing a lot of challenges. It could be recalled that government made similar promise in 2009 to hit 6,000mw of electricity generation in the last quarter of that year, but it was not realisable, even as gas shortage was said to be one of the major factors impeding the process.

Accordingly, distribution of pre-paid meters to consumers in order to jettison the estimated billing system has not been done for years now. The previous government also introduced a scheme for Nigerians to pay between N50,000 and N25,000 for pre-paid meters under the new Credited Advance Pay for Metering Implementation (CAPMI) scheme, but the outcome was not published at the end of the exercise. That time, the Chairman of NERC, Dr. Sam Amadi, explained that the single phase pre-paid metres would be sold for N25,000 and three phase metres for N50,000. He listed Ibadan, Eko, Benin, Abuja and   Kano as the companies to be used for the pilot scheme of CAPMI, yet nothing tangle has been heard about that scheme anymore.

Electricity generation capacity in Nigeria:

The statistical overview of electricity generation capacity in the last few years shows that the sector has not recorded any remarkable improvement as shown below:

2011 –   4,321mw

2012-     4,517mw

2013- 3,563

2014- From 3,513 to 2,513 in the last quarter

2015- last quarter 4,000- 5,000.

Source: Vanguard

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