Consumers War Erupts In Nigeria Over Electricity Tariffs Hike

608 views | Akanimo Sampson | January 6, 2020

Electricity consumer groups in Nigeria are literally up in arms against the authorities over the disturbing tariff increase for end-user customers amid epileptic power supply.

Consumers were jolted at the weekend with news reports that tariff was going up across the country. Reports said the 11 electricity Distribution Companies (DisCos) have the mandate of the Nigerian Electricity Regulatory Commission (NERC) to effect the tariff increase from April.

These are Abuja Electricity Distribution Company, Benin Electricity Distribution Company, Enugu Electricity Distribution Company, Eko Electricity Distribution Company, Ibadan Electricity Distribution Company, Ikeja Electricity Distribution Company, Jos Electricity Distribution Company, Kaduna Electricity Distribution Company, Kano Electricity Distribution Company, Port Harcourt Electricity Distribution Company, and Yola Electricity Distribution Company.

But, the groups on the warpath-Energy Consumer Rights and Responsibilities Initiative and the All Electricity Consumer Protection Forum- told the News Agency of Nigeria in Lagos, the commercial capital of Nigeria, that increment in electricity tariff was unjustified based on present realities.

National President of Energy Consumer Rights and Responsibilities Initiative, Sural Fadairo, while noting that increasing the cost of electricity was not the panacea to the country’s energy crisis, argued, “if they want to increase tariff because the DisCos are under remitting due to debts by consumers, that will not solve the problem.

“If people are refusing to pay now because they are disputing their bills will they now pay if it is further increased? What they need to do is to meter all electricity customers, so that we can end the issue of estimated billing. So, from the consumer point of view, we are totally against any increment because power generation and supply have not improved significantly in the country.“

For the National Coordinator of All Electricity Consumers Protection Forum, Adeola Samuel-Ilori, the increase was totally uncalled for in all ramifications.

According to him, “the basis for such increase at this time can’t be justified in that consumers have not been metered and they still purchase transformers and other line materials by themselves with attendant extortion via estimated billings. All these are not taken into consideration and extensively dealt with before contemplating tariff increase.”

Going by the claimed NERC directive, in Abuja, residential customers are expected to be paying N47.09 per unit as against the current N27.20, while in Lagos customers in the same category are to pay N36.92 per unit instead of N26.50.

Consumers in the commercial category are expected to start paying N38.14 per unit instead of N24.63, while those in the industrial category currently paying N25.82 per unit will be paying N35.85 per unit.

In Eastern Nigeria, the hotbed of Biafra agitation, residential customers currently paying N27.11 per unit will be paying N48.12 per unit.

While NERC said the order was pursuant to Section 32 and 76 of the Electric Power Sector Reform Act aimed at providing cost-reflective tariffs that ensures prices charged by licensees are fair to consumers, it also directed the DisCos to complete settlement of market invoices.

“All DisCos are obligated to settle their market invoices in full as adjusted and netted off by the applicable tariff shortfall”, NERC said, adding: “In the determination for compliance to the minimum remittance threshold in this Order, the commission shall consider verified receivables from MDAs for the settlement period and DisCos’ historical collection efficiency for MDAs.

“The commission shall hold the transmission companies responsible for deviation from the economic dispatch Order that adversely impacts on the base weighted average cost of the wholesale of energy.”

The commission last approved an upward review of electricity tariff in July. Then, it claimed that the tariff adjustment was based on the relevant data is obtained from the Central Bank of Nigeria (CBN) and the National Bureau of Statistics (NBS) such as the average monthly inflation rate of 11.3 percent, the exchange rate of N309.97.

It also pointed out that it obtained its data on inflation rate from the US rate of inflation, which projected 1.8 percent for the period of January to October 2019, adding that all DisCos are “obligated to settle their market invoices in full as adjusted and netted off by the applicable tariff shortfall.”

NERC disclosed this In its December 2019 Minor Review of Multi-Year Tariff Order 2015 and Minimum Remittance Order for the Year 2020, NERC said the order was issued to reflect the impact of changes in the minor review variables in the determination of cost-reflective tariffs and relevant tariff and market shortfalls for 2019 and 2020.

It said the order also determined the minimum remittances payable by the Discos in meeting their market obligations based on the allowed tariffs. “The Federal Government’s updated Power Sector Recovery Programme does not envisage an immediate increase in end-user tariffs until April 1, 2020, and a transition to full cost reflectivity by the end of 2021.

“In the interim, the Federal Government has committed to funding the revenue gap arising from the difference between cost-reflective tariffs determined by the commission and the actual end-user tariffs payable by customers.”

“Effectively, this order places a freeze on the tariffs of TCN and administrative charges until April 2020 at the rates applied in generating MO invoices for the period of January to October 2019.”

Meanwhile, NERC’s General Manager in-charge of Public Affairs, Usman Arabi, has posted on the agency’s website: ” The attention of the NERC has been drawn to the publication in several electronic and print media that end-user electricity tariffs have been increased following the approval of the minor review (2016 – 2018) of the 2015 Multi-Year Tariff Order on Aug. 21, 2019.

“We wish to provide guidance that the minor review implemented by the commission was a retrospective adjustment of the tariff regime released in 2015.

“This is to account for changes in macro-economic indices for the years 2016, 2017 and 2018 thus providing certainty about revenue shortfall that may have arisen due to the differential between tariffs approved by the regulator and actual end-user tariffs.

“The commission, therefore, wish to notify the general public that no tariff increase has been approved by the Commission vide the order.”

Arabi however, pointed out that NERC, in the discharge of its statutory responsibilities will continue to undertake periodic reviews of electricity tariffs in accordance with the prevailing tariff methodology. ‘’In all instances of such reviews and rulemaking, the commission will widely consult with stakeholders and the final decision will take due regard to all contributions’’, he said.

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