The other day, Vice-President, Prof. Yemi Osinbajo, advised Nigerians to brace up for an predictable increase in electricity tariff. Speaking at the 6th Presidential Business Forum in Abuja, the vice president explained that there was no question at all that “we must pay higher electricity tariff.”
With a caveat he, however, said that the government would not allow any increase until its efforts to clean up the electricity value chain is completed. According to him, government is still paying N700bn assurance guarantee annually to ensure uninterrupted gas supply in the power sector. The Distribution companies, Discos had also recently written to the regulator, the Nigerian Electricity Regulatory Commission, NERC for a 200 percent hike in tariffs.
It is like these DISCOS don’t live in Nigeria. Otherwise, they shouldby now that they are pushing their luck too far. Because the plan for an increase in electricity tariff is unacceptable. As the vice-president has reasoned, the only way that an increase would be in order is if the electricity value chain is cleaned up and electricity supply increases significantly. Poor electricity supply has forced many industries to relocate to neighbouring countries, while many small businesses have shut down because of unstable power supply. Secondly and perhaps more important is the estimated billing system. This remained a contentious issue. Many electricity consumers believe that estimated billing is fraudulent. With the absence of meters, consumers are left in the hands of these Shylock DISCOS. It is a fact that DISCOS want to have it both ways. They eat from government and at the same time defraud their customers through bogus estimated billing.
These are the problems in the power value chain that need urgent resolution before any hike in tariff is contemplated. Doing otherwise will an attempt to emasculate the populace. The truth is that many Nigerians will not be opposed to a reasonable increase in electricity tariff if they are assured of regular power supply. What they are receiving now are atrocious bills for unstable electricity. Nigerians are paying for darkness and low quality electricity as a result of damaged or old distribution equipment which supplies what we call “half current”
Since the inception of reforms in the power sector, and the introduction of the Multi Year Tariff Order (MYTO) which guides the economics of electricity trading in Nigeria, the periodic tariff reviews it provides for have not been controversial. Figures from the National Bureau of Statistics (NBS) indicate that the MYTO of 2015 was arrived at with gas prices of $2.44/mmbtu, which now hovers above $3, an inflation rate of over 13 percent. The forex rate at the time was also $1/N198, but it is now N306 to a dollar at the official rate. This, experts say, has negatively affected the importation of maintenance parts.
There have been allegations of inefficiency and profiteering by Discos through tariff hikes, which the government has not been able to resolve. This has left consumers at the mercy of the distribution companies. Yet, power generation and supply remain critical to the economic wellbeing of the citizens and the development of every sector of the economy.
Again we strongly oppose the issuing of atrocious bills through estimated billing. Let all consumers who want meters be supplied with the equipment so that they can pay for only the electricity they use. There must also be stability in power supply before the hike is contemplated. Government must protect Nigerians from the highhandedness of electricity distribution firms. Since their emergence over three years ago following the privatisation of the power sector, they have shown lack of capacity to achieve the objectives of the unbundling of the Power Holding Company of Nigeria PHCN.
These DISCOS should not be encouraged by government to make the people pay for their incompetence. After all in the last two years, government’s financial intervention has saved them from insolvency. Therefore, any resort to an arbitrary increase in tariff to mask their financial inadequacy will not be acceptable.
Instead of shoring up the Discos through higher tariffs, the ones that cannot deliver on the nation’s power supply objective should be declared insolvent and taken over by the government immediately. The Federal Government has sunk so much into the power sector with little to show for it. The time has come to make power companies deliver on their mandates; not to make make the people continue to suffer in silence.
