The incumbent acting Chairman of the Nigerian Electricity Regulatory Commission, NERC, Dr. Anthony Akah, in this interview with our Abuja Bureau Chief has berated the recent nationwide protest organized by the Nigerian Labour Congress on the recent upward tariff review, saying the protest is unnecessary. He called on workers union to avail itself of the right channel in addressing their submissions, while insisting that the less privileged are not affected by the increased tariff. Shola Akingboye reports:
The recent hike in electricity Tariff still remains fresh in the memory of most Nigerians, particularly owing to the country-wide protest against it. Has NERC come to terms with the reality on what the Nigerian Labour Congress and other civil society groups are asking for?
Well, we welcome some submissions from NLC and other interested groups in line with our regulations and the Act, that any aggrieved party is given the sixty days to file their protest before the commission and those areas will be looked into by the commission in the most passionate manner and ensure that we come up with the most fair adjustment if need be or to sustain what we have if we feel that it is expedient. Therefore, we implore all Nigerians, agencies or association to avail themselves that opportunity rather than going on public protest.
What else would you have expected from the Labour Union in times like these?
There are avenues for any interested group to file submissions against the DISCOs and the GENCOs before the commission. We on our part will then look into that, but we have to understand the fact that electricity is a product, just as we have any other tangible product in the market place. So, electricity is also affected by the changes in the micro-economic indices just as the foreign exchange rate, as well as the inflation rate. And the critical factor is in getting both the quality of power and the quantity of power that we are looking at and to also give a market reflective tariff that will encourage investors going into the business. No investor will go into any venture that will not produce Return on Investment (ROI), neither would any financial institution give you any loan if from day-1 there are no proof that there is going to be a Return on Investment.
Is NERC speaking for the Discos?
At NERC, we are also mindful of the plight of the Nigerian electricity consumers, and to ensure that in the tariff order, strong consumer protection mechanisms are tie to that order. We also look forward to a constructive submission from members of the public and see if there is need to make adjustments, but in the absence of that, we make use of the data at our disposal, covering the market in ensuring that the tariff we have is market reflective in line with the reality on ground. What we need to do is to come with initiative and part of that initiative is cost reflective management and energy efficiency driven.
How will you do that?
We as regulator have just consulted with the Energy Commission of Nigeria- ECN, NESREA, NOA as well as SON, so that Nigerians will have more efficient way of using power and that will reduce their bill as much as 35 percent and thus increase access for more Nigerians on those energy they save. So we have the initiative that will help Nigerians deal with this.
We have the Power Assistance Consumer Fund as we are mandated under the Act to take care of the less privileged. As soon as we have wrapped up the meter levering method, we should be able to get the Minister to help us implement those frameworks. But most importantly, as Nigerians, we have to accept the fact that this is also a business, just as those individuals who have adjusted their cost in reality of what is accruable to them in the market, so do this group of people. But as regulator, we make sure that the only tariff that we approve are the tariff that are strictly cost incurred based on prudency and are absolutely necessary for the production and the distribution of power.
You mentioned that you act when you get submission, are you saying NERC does not act until it gets submissions from the public and what action have you taken since the NLC tariff protests?
Submissions should be based on fact; the tariff order is there on the NERC website for all to see and we are available to continue to give clarifications where need be. And you can only say that the inflation rate is this and we use the wrong inflation rate, not in criticizing the tariff structure. So, based on that critical condition, we can now make informed decisions. But when you make a protest and you don’t submit in concrete and clear terms, it becomes difficult to make any informed judgment. For example, last year we got submissions and representations from the Manufacturers Association of Nigeria, MAN, and we took a decision to zero down the collection loss; though we realized that it wasn’t the best decision that should have been taken under that circumstance. The regulation’s time is not yet filed out; we were given sixty days to submit. For example, saying line A under the old tariff, ‘we feel it should be this is because of these factors; but we have not gotten such from NLC and we are hoping to get that within the sixty days window.
Does that mean something can still be done by NERC?
We are open to continue to engage them and we are confident that based on the reality and the fact before us. For example, foreign exchange is now going for as far as 318 Dollar to a Naira and every producer is adjusting his cost; the inflation rate on cost of gas is there, it does not gives incentive to the cost of producing gas, and under this tariff we have adjusted it to the reality of the market cost of gas, which is $3/30cent plus a willing charge of 80 cent, so such adjustment certainly is going to affects the tariff. So let’s face the reality and see what we can do within the circumstance to build a more vibrant economy through a vibrant and productive power sector. We cannot continue to pretend that electricity is not a product, for as long as you continue to see electricity as a social commodity that is free, so long that we are pretending that the sector not dyeing; the sector is dying. But we as regulator, consumer interest must be protected while the distribution companies must adhere to their performance agreements, and we have given them a market reflective tariff and no excuse whatsoever for them not to do what they have to do in order to give Nigerians value for money. Though, they also have expressed concern that we gave them five years period to do that based on the performance agreement, we are now saying that we give you an order of one year with their submitted concern to us, and in sixty days, we are going to look into it. We are not looking at anything that is more than two year time-frame.
But what is NERC doing against the Discos on metering gap?
The distribution companies on their own are delighted and more eager to meter Nigerians, because there is a factor that is in-built in the tariff order; that factor means that Nigerians have power. For example, if you are a metered customer and you are given a bill that you feel is unrealistic, you know you are not going to pay it until that particular time that the bill under dispute is resolved, so you only pay the bill that you last agree to pay. What that means is that the distribution companies now have a trigger to work so hard to meter the whole Nigerians rapidly as much as possible, simply because they won’t have more Nigerians protesting on their bills. So, we have done the right regulatory framework to protect Nigerians. And it is important that I plead that everyone should understand that the less privilege Nigerians are not affected by this tariff. The R1 Customers tariff still remains at four naira as of last year. It is not correct those with those re saying the poor are going to be make poorer. Two, the tariff order takes care of the poor, the R1 is still at four naira, the tariff mechanism is a cross subsidy mechanism where some of us who are more affluence should bear more of the burden, not our less privileged.
What happens to other class of consumers?
The R2 Class has a little bit increase in tariff, we have the commercial class, which eventually will pass through the cross to help the poor, but the poor are more protected on this tariff. The poor also have a mechanism for the window on the long run to be protected through the Power Assistant Consumer Fund. The commission is working so hard to come up with it. We want every Nigerian to understand that for the first time, we have got a good market reflective tariff that will trigger the much desired growth in the industry and trigger a better quality of life. There is no need coming out in public protest, when you do public protest, you heat up the polity.