Power Tariff Hike: Presidency Mulls Convert Embargo


Barring unforeseen circumstances, there will not be announcement and implementation of hike in power tariff until after the next generation elections, New Telegraph has learnt.

The Presidency, this newspaper gathered, is considering the idea of slamming an embargo covertly on the implementation of the new MYTO review, which has just been concluded by Nigerian Electricity Regulatory Commission (NERC).

Despite protest by many consumer groups led by the Manufacturers Association of Nigeria (MAN) and Network of Electricity Consumers Advocacy of Nigeria (NECAN), a source at the Presidency told this newspaper, NERC has completed the review, which it started last year.

“NERC has, through the Minister of Power Works and Housing, Mr. Babatunde Fashola, briefed the president on the completion of the MYTO review. However, implementation of the order is not likely until after the general elections,” said the source.

“The Presidency considers this tariff issue to be one of the major elements that could shift peoples’ decisions before and during the polls, hence, the embargo of the implementation is on the card as we speak.”
He, however, added that this “will be done covertly.”

The MAN and NECAN had earlier registered their displeasure when the Federal Government commenced the major review of MYTO process.

The Federal Government, as reported by this newspaper, had already yielded to pressure from power investors to begin a major tariff review, which reflects the “current economic realities.”

A correspondence exchanged between NERC and DisCos sighted by this newspaper, showed that the Commission had dumped the biannual template used in tariff review for a monthly review as earlier demanded by those who, through $2.525 billion investments, bought over the defunct PHCN on Friday, November 1, 2013.

The government had, through its agency, the NERC, on June 7, given a one-month notice for major stakeholders to feed it with their positions on the plan to change the period of tariff review from every five years to monthly or quarterly “in order to reflect current economic realities.”

President of MAN, Dr. Frank Jacobs, had said on the sidelines of a stakeholders’ meeting in Lagos, that any move to review the tariff would worsen the woes of Nigeria’s economy, which is already suffering from 95 percent tariff increase in 13 months.

Speaking through Chairman, Economic policy, MAN, Reginald Odiah, Jacobs told this newspaper that his group, which forms the larger chunk of the Maximum Demand Customers, was contacted by NERC and they completely objected to any review of MYTO.

He said: “What we know, which we want them to know, is that our budget is done yearly and any attempt to change the tariff of electricity to monthly or quarterly period, will affect our budget and worsen the harsh economic situation being faced by our members and the generality of Nigerians.”

MAN, which has membership strength of 3,500, he explained, is yet to recover from the last tariff hike and the planned review would chase out more manufacturers and drastically reduce their number in the country.

Stating that cost of power for manufacturing is exorbitant in Nigeria, the MAN boss said that China spends less than 10 percent of its production cost on electricity, while its members spend 40 percent of their production on electricity.
He said: “Utility supply is very weak, there is unstable power. Most factories and, in fact, all factories in Nigeria, use the alternative source as the main source of power supply, but use the grid power as a backup.

“We as consumers have lost total confidence in NERC. What we pay as electricity bills is outrageous, it doesn’t make any sense! The electricity reforms that we clamour for has failed. We think that government is not doing enough. There is a need for NERC to get all stakeholders in the electricity value chain.

“We will jump at any efforts to improve electricity in Nigeria. This present state of supply is killing our businesses.”
Chairman, NECAN, Chief Tomi Akogun, corroborated MAN’s view. He alleged foul play in the perceived foot-dragging by distribution companies (DisCos) to meter all their customers, saying that the hike in tariff, if allowed to sail through, would worsen the hash economic situation facing Nigerians.

He said: “Now NERC is planning MYTO 2017 to introduce monthly review. This will have a negative impact on our economy. This means the producers cannot even know their cost. It will further worsen Nigeria’s status as a terrible country for investments.

“We have about 40 percent consumers metered. Over 60 percent consumers, who are not metered based on faults that are not from them, will suffer this great injustice.”

The DisCos, however, disagreed with MAN and NECAN, insisting that the country deserves “cost reflective tariff,” which is not yet in place, to get the power sector working.

Source: New Telegraph

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