There are strong indications that the Minister of Power, Works and Housing, Babatunde Fashola, might be forced to increase electricity tariff by 200 percent, as distribution companies across the country, have threatened a total shut down of operations, if their request is not granted.
The proposal from the distribution companies, seeks to increase the current rate of N22.8 kilowatts per hour, to N105 kilowatts per hour.
The planned increment is coming, not less than 8 months after the Nigerian Electricity Regulatory Commission, NERC, had increased electricity tariff by 45 percent.
Despite the nationwide condemnation and disobedience of court orders on the 45 percent increment, the Distribution Companies have been reported to have sent a copy of the new proposal to electricity regulatory body, for ratification and enforcement.
Confirming the latest development, the Chief Executive Officer, Association of Nigerian Electricity Distributors, Azu Obiaya, noted that the reason for the increment was geared towards providing better services, and also remaining in business, as the prevailing nation’s exchange rate have made a mess of the previous increment.
Azu said, “To review the tariff, we will be looking at an average rate of N70 per kilowatt-hour for residential consumers. But some Discos will like to have the rate as high as N105/kWh.
“Already under the tariff of N22.8 kilowatts per hour, some Discos, such as the Jos Electricity Distribution Company, are charging N32.26/KWH, with experts expressing fears that if the N105 kilowatts per hour is approved, some Nigerians might be coerced at the end of the day, to pay up to N150 kilowatts per hour, as the nation’s regulatory sector is as good as dead.”
Meanwhile, the lowest energy charge experienced so far within 2016, is N15.83/KWH payable by R2 customers, who get power from Ikeja Electricity Distribution Company.
A further investigation, shows that the average energy charge for all the 11 Discos, is N22.8/KWH.
Yet the Discos were said not to be comfortable with the current rate, as they argued that it was not cost reflective, and was hampering the required expansion of infrastructure, as well as the smooth flow of operations.
Presently, a Senior Official of the electricity body, who reacted to the planned increment said, “The minor review of tariff is ongoing at present, but NERC has yet to consider their plea for such increase in tariff, although the economic fundamentals in Nigeria have seriously changed, and are now so high.”
On the other hand, the National Secretary, National Electricity Consumers Advocacy Network, NECAN, Obong Eko, stated that the association would never support such move.
He said, “The books of the Discos are so bad, that they have no chance anymore to access finance.
“These books do not reflect the cash flow that is necessary for them to be taken seriously by any lender,” Eko stated, while calling for an overhaul of the whole privatization process.
Source: Post Nigeria