Not time for electricity tariff increase

The way NERC gleefully rushes to implement new electricity tariff makes it look like that is its only primary function.

Unless reason prevails, electricity consumers in the country will start paying higher tariff from July, as the Nigerian Electricity Regulatory Commission (NERC) has commenced the processes for July 2021 “minor review” of Multi-Year Tariff Order (MYTO) for the nation’s 11 power Distribution Companies (DISCOs).

In its notice of Minor and Extraordinary Review of Tariffs for Electricity Transmission and Distribution Companies, NERC blamed the tariff review on inflation, foreign exchange, gas prices, available generation capacity and capital expenditure, insisting that it is done when industry parameters change from those used in the operating tariff to such an extent that a review was urgently required to maintain the viability of the industry.

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The way NERC gleefully rushes to implement new electricity tariff makes it look like that is its only primary function.

NERC had, in an order signed by its Chairman, Sanusi Garba and one of its Commissioners, Dafe Akpeneye, kicked off the year on January 1, 2021, by instructing DISCOs to increase tariff.

This followed a suspension of an earlier order issued in August, increasing tariff from September 1, 2020. However, a threat by The Nigeria Labour Congress (NLC) to go on a nationwide strike forced the government to suspend the tariff for two weeks ending October 15th, 2020.

At the completion of the two-week suspension, the federal government and organized Labour agreed to provide a three-month tariff relief of N10.20 per kilowatt-hour for Nigerians and also distribute six million free meters.

Now, without providing the six million meters to consumers or improving the supply of electricity, NERC plans to increase tariff.

And expectedly, it met a firestorm of anger from Nigerians and electricity consumer groups who insist that there is no justification for any upward review of tariff due to the current economic realities and challenges being faced by Nigerians. The Energy Consumer Rights and Responsibilities Initiative (ECRRI), while maintaining that minor review was not automatic even if it was done every six months, accused NERC of pursuing tariff review outside the provisions of Section 76(1) of the Electric Power Sector Reform Act (EPSRA) which states that a licensee can ask for a review premised on what the licensee has spent so far to improve supply.

The group said that as electricity supply has not improved recently based on the DISCOs investments, what Nigerians need is improved supply not tariff increment.

The All Electricity Consumers Protection Forum (AECPF) said as Nigerians were still struggling to cope with the last tariff increment including rising inflation in costs of goods and services and growing unemployment, “there is no justification for any increment in electricity at this point in time. We are even thinking of how government can give electricity credits to Nigerians to ameliorate their plights.”

Faced with backlash, Minister of Power, Sale Mamman, said instead of a significant hike in electricity tariff, Nigerians should expect increased efficiency in the sector to reduce tariff, while managing headwinds from foreign exchange and inflation.

Whichever way, it is insensitive and an insult on the intelligence of Nigerians for NERC to even consider increase in electricity tariff, a utility that the supply has dwindled to alarming proportions. NERC should not make Nigerians subsidize inefficiency in the power sector.

In less than one year, electricity tariff has been reviewed upward twice and this is not good for the psychology of citizens. While they are struggling to come to terms with a new tariff, another one is announced.

While we agree that there is inflation in the country resulting in high cost of several items, we must state here that, that situation is not restricted to the electricity sector. It is affecting all sectors of the economy and Nigerians are already bearing the brunt.  Increasing tariff at this point will only add to the hardship being experienced. This idea of dumping costs on citizens needs to stop, as they are also part of the system.

It is also important for the DISCOs to keep their end of the bargain; by installing pre-paid meters for all consumers and boosting electricity supply before any other thing.

Furthermore, we urge the NERC to revert to its primary duty of protecting the interests of existing and future consumers by ensuring affordable tariff, safe, reliable and available electricity supply.