Possible Increase in Electricity Tariffs

Louis Edozien

Last week reports emerged that the Federal Ministry of Power, Works and Housing may approve a hike in electricity tariffs as a way of tackling the crisis in the power sector. This was based on a statement by the Permanent Secretary, Ministry of Power Louise Edozien. Speaking during the opening ceremony of the third National Council on Power (NACOP) meeting in Jos, he lamented that low tariffs “remain a stumbling block on the way of developing the power sector.”

He said, “I will like to focus on two major challenges of the sector. The first one is how to deliver available power on the grid to consumers, and the second is the problem of debts and other related issues of collection and tariffs. The tariff is too low and some consumers still don’t pay their bills, because the Discos have not metered them, so they are not sure they are paying for only what they have consumed. So, the Discos do not pay Nigeria Bulk Electricity Trading (NBET) its full invoice. NBET in turn defaults in payment to the generation companies (Gencos).”

 The issue of unused megawatts came up at the meeting, with Gencos urging the Electricity Regulatory Commission (NERC) to classify the stranded 2,000 megawatts as part of the available generation capacity in the Nigerian Electricity Supply Industry, NESI. We appear to be going back and forth on this electricity supply issue. Just when Nigerians are beginning to heave a sigh of relief that things might be getting better, the power distribution companies come up with lamentation and tales of woe.  The import of steady power supply to individuals and the nation’s economy cannot be over-emphasised and all Nigerians are desirous of a permanent solution. However, increasing tariffs is not the answer to the problem.

Shortly after the present administration assumed office, tariff was increased and Nigerians thought that would translate into improved power supply. That did not happen. So, the way to go now is to address the problem from the root and that is metering.  Why is it that over a year after the federal government issued an order to the Discos that every power consumer should be metered, we still have a huge number of unmetered consumers? It is unfortunate that since the directive, no tangible effort has been made to ensure that all consumers are metered. Instead, it appears there is a deliberate effort to keep a certain section of Nigerians on Estimated Billing.

One of the reasons cited for the plan to increase tariff is low cost.  While permanent secretary said the tariff is currently too low, in the same breath he complained that some consumers do not pay their bills. How can the ministry tell that the tariff is too low when it has not been able to collect money for electricity supplied? The necessary first step is to ensure that consumers pay for what they have consumed. The best way to achieve that is to meter all consumers. Aside providing meters, the authorities should also ensure steady power supply.  During the meeting, it was noted that out of the megawatts generated, over 2,000 are “stranded” meaning that they are not evacuated for distribution because of the fear of non-payment. This is also an issue that can be tackled through metering.

So at the root of the problem is the issue of meter. There is no way any consumer can get power for free if he/she is metered. Other service providers in the country have devised means of ensuring that consumers pre-pay for services rendered; the electricity companies should take a cue from them.  Another issue that the electricity companies have not considered is that if at the moment consumers are not paying for the supposedly “low” tariff, the situation will definitely be worse when it is increased. Nigerians are tired of the tales emanating from the power sector. It is time they get their act together and provide power to the citizenry and economy.

Source: IWIN

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