NERC, Electricity Distribution Companies Suspend Tariff Review

NERC

Power distribution companies (DISCOs) across Nigeria failed to go ahead with the implementation of the tariff review on Sunday, November 15, freeing over 60 million Nigerians who are connected to the national grid from payment of 40 per cent hike in electricity tariff.

Investigations by platforms Africa revealed that the failure to go ahead with the plan was buoyed by an order, which the National Assembly gave to the Nigerian Electricity Regulatory Commission (NERC) to stop further action on the tariff review.

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.

The House of Representatives committee on power, further checks revealed, had written a letter to  NERC, ordering it to desist from going ahead with the tariff hike.

“What NERC did was that it copied all the DISCOs the letter it received from House committee and this is the major reason that we have not gone ahead with the implementation of the review as expected on Sunday, November 15,” the chief executive officer of one of the DISCOs said after his anonymity was guaranteed.

“The letter is a follow up to an earlier directive, which the committee gave to the NERC and DISCOs to halt any plans to implement the review,” he added.

The House had on November 6, passed the resolution after debating a motion moved by a member from Plateau State, Solomon Baren summoning NERC and all ‘DISCOs’ operating in the country to appear before the lawmakers to explain why an upward review of tariff was necessary at a time consumers complained of poor supply of electricity.

In a resolution passed unanimously during its plenary, the House further asked NERC and distribution companies to “immediately begin the provision and installation of pre-paid metres to every consumer nationwide.”

Solomon Baren submitted that handlers of the power sector and the distribution companies were taking Nigerians for a ride by contemplating another tariff hike when the reality on the ground was that electricity supply had not improved.

Part of the motion reads, “The House further notes that power generation and distribution in Nigeria is in a state of comatose, leading to the closing down of many industries, thereby creating unemployment in our dear country and hampering the development of small and medium scale enterprises.

“That this House, indeed, resolved against further collection of flat rates or service fees by DISCOs, which were termed illegal and not in tandem with best practices.

“That NERC had directed DISCOs to comply with the above resolve. That these DISCOs are about devising another way of collecting this money under another guise.”

About two years after the distribution companies took over power distribution in the country, the House argued, they had not added any infrastructure to the sector to warrant frequent tariff hikes.

Meanwhile, consumers in the country have continued to voice opposition to the plan to hike electricity tariff. 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.

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.

The Manufacturers Association of Nigeria (MAN) said that 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.

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.

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