Power sector reforms, new tariff and the rest of us

The first quarter of 2016 has had power sector related issues running as a consistent thread through it. The February 1 kick off date for the tariff review by the Nigeria Electricity Regulatory Commission was not well received by Nigerians, owing largely to negative perceptions surrounding the power sector as a whole – which had […]

The first quarter of 2016 has had power sector related issues running as a consistent thread through it. The February 1 kick off date for the tariff review by the Nigeria Electricity Regulatory Commission was not well received by Nigerians, owing largely to negative perceptions surrounding the power sector as a whole – which had existed for decades before the reforms –  and this was eventually expressed by the trade and labour unions first and by the members of the Senate later in the same month.
These were further aggravated by the sharp plummeting of power generation from a record breaking peak of 5,074MW in February to a low of around 1,500MW by the first week of March. Understandably, customers who were already peeved about the tariff increase, now living through days of power outages, felt even more vindicated about their initial resistance to the tariff review.
However, it is important to separate the issues involved here clearly so that Nigerians do not back the wrong horse in our overarching collective goal of improved power supply that will make Nigeria take its rightful place as a leading emerging economy and the driver of an African economic resurgence. Let us face it: without steady power supply, our efforts to grow our economy will not make much progress and as the largest economy in Africa, this will have a repercussion across the continent.
But how do you transform a sector that has existed for decades under a heavily subsidized regime (an automatic guarantee of revenue loss if issues of pricing are not immediately reviewed to bridge the subsidy gap), plagued by corruption and with an entrenched poor maintenance culture? How do you rebuild confidence in the sector after decades of public dissatisfaction?
How do you convince Nigerians to believe in the very practical reality that the reviewed tariff will translate to a subsequent increase in the national grid of 5,000MW this year which will ensure that all the 11 DisCos have a rise in their daily load allocation shortly and by implication to higher hours of electricity for all classes of customers when the activities of vandals have thrown the same Nigerians into darkness?
For instance, Abuja Disco should be getting over 500mw instead of the previous 400mw, Kano Disco allocation will grow by 100mw from about 250mw, Eko Disco will rise to over 600mw from its past 470mw among others.
The federal government began the reform in the power sector in 2005 to pave way for a ‘cost reflective’ system where power supply is commensurate to the investments and cost of operation in a bid to encourage efficiency in service delivery, attract investment for massive infrastructural upgrades that will both replace aging equipment spread across the length and breadth of the country with a whole new generation of equipment that will provide the quality power needed for both industrial and residential consumer use as well as fuel expansions across the generation, transmission and distribution networks.
This dream began to unfold in 2006 when the first fairly appropriate power pricing system, the Multi Year Tariff Order (MYTO) debuted. The new accountability system charted a course for investments target in the sector with the actualisation of the privatisation in 2013. Power generation target became clearly defined with the MYTO especially in 2012 when peak generation rose to 4,500 megawatts (MW), the first in the history of Nigeria.
The MYTO 2 was launched the same year delivering better efficiency than the previous one but was nothing near the ideal cost reflective tariff operated in other climes. The new investors were given the utilities to turn around, improve efficiency and reduce the revenue losses that have deprived hundreds of millions of Nigerians of electricity supply.
Key in the agreement with the federal government, through the Bureau of Public Enterprises (BPE), before committing to improve the networks is the pre-condition that the electricity tariff model will be such that justifies the huge cost of investments to be made in aged and battered power assets.
While the about five privatised Generation companies (Gencos) and 11 Distribution companies (DisCos) made critical moves to source for funds to turn their networks around, the efforts were met with stiff opposition from no other source than their account books.
Due to high loss prospects, poor revenue collection system, bad debts of MDAs and a lower-than-investment tariff order (MYTO 2.1), many banks would not lend funds for capital projects as they feared (rightly so) the operators would not recoup their investments, or pay up the loans in due course.
With the improved tariff system, the DisCos have assured of rapid investment moves to bridge the deficiency gap and increase distribution of power supply hour to the numerous customers. The assurances are captured in their investment plans covering metering, network expansion including replacement and installation of transformers, concrete poles, better and safe power lines.
Other commitments include expanding vending units, integrating Information Technology (IT) platforms like online payments to make electricity token recharge easier and accessible.More still, there is the advancement of dedicated customers’ complaint handling centres across the11 DisCos, a feat that was unheard of during the defunct PHCN. 
As DisCos work hard to eliminate the estimated billing method by adequately metering customers, it is ensuring that bills being paid manually are well-documented and reconciled faster with our introduced POS teller printers.
This process alone has eradicated the corruption that was prevalent with bills payment in PHCN when customers who paid bills would not see such reflect in their future monthly bills.
There is also good news for all electricity users; the tariff is expected to fall by over 25 per cent average next year. This is because the planned huge investments made this year would begin yielding fruits with attendant power increase from projected 5,000mw to about 7,000mw by 2017, the federal government assured.
I have taken the time to go through some of the efforts put into the sector by successive governments and the private sector because at the end of the day, the question we should all be asking ourselves is, after all the effort we have put into this critical project that will affect us all – and the generation that will drive our economy ten years from now when the benefits of the reform become an integral part of our individual and business lives as Nigerians – are we really surrendering to allowing perceptions that built up by the state-owned utility in the past be transferred to new private interests working to transform the sector?
Samson wrote in from Wuse 2, Abuja.