It is impossible to have a fair tariff in an electricity market that has a low record of power users and yet ever more consumers.
This was explained by the minister of Power, Works, and Housing, Babatunde Fashola in a televised interview this week in Abuja.
Fashola was responding to a question regarding permission to allow the 11 electricity distribution companies (DisCos) to increase electricity tariffs. Read more…
According to THISDAY, the minister noted that only about seven million households are recognised customers out of Nigeria’s 180 million people, adding that proper consumers’ enumeration is required to establish the true basis for calibrating tariffs in the sector.
He also highlighted that the DisCos would have to improve their deployment of meters to consumption points and that until these were done, approving a cost reflective tariff for the market looked difficult.
Electricity tariffs review
He further explained that as the minister of power, he does not decide when to increase tariffs but that the decision lies with the Nigerian Electricity Regulatory Commission (NERC).
Fashola said: “We need to do something with the entire value chain, from tariff to metering to energy conservation, consumer education, to the payment of debts by ministries and departments and ordinary consumers, and all of this are contained in the power sector recovery programme.
“Tariff is important. The agency that decides on tariff is the NERC, not the Ministry of Power, Works and Housing, and not the Minister for Power. The minister has no power over tariff under the law. When the last tariff was passed, I had no power and didn’t approve it, it was NERC that approved it. All I had was an opinion which I expressed.”
He added: “My opinion as at today is that before we can review tariffs, we should increase metering, we should also increase consumer audit to actually properly dimension the economy and see whether the unit cost is understated or overstated.
“Because, if you have a market, an electricity market where seven million households are all that is in the database as consuming electricity in Nigeria, I am not sure that data is correct. So, if the tariff is one naira and applied to seven million households, it is possible that if they are actually 14 million households, you may collect more without necessarily increasing the tariffs but properly dimensioning the market.”