Electricity Firms Push For 100% Tariff Hike

Electric power lines

Electric power distributing firms are pushing for a fresh 100% increase in electricity tariff, the second in six months, Daily Trust investigations have shown.

Daily Trust report continues:

The electricity distribution companies (DisCos) raised tariff by over 45% in February.

The DisCos had written to the regulatory authority, the Nigerian Electricity Regulatory Commission (NERC) demanding hike in tariff from the current average of ₦24 per kilowatt (for residential consumers) to ₦50 per kilowatt.

However, the Director General of the Manufacturers Association of Nigeria (MAN), Mr Remi Ogunmefun, told Daily Trust in Lagos that his association had opposed that move in writing to the NERC.

The NERC announced the 45% hike in electricity tariff with effect from February 1, 2016, and said the increase would enhance service delivery and customer satisfaction.
But since the increment, the electricity supply across the country has dropped affecting both household and commercial activities.

A source at the NERC confirmed to Daily Trust that the DisCos had written a letter seeking for the increase.

“When MAN got wind of the power firms’ letter seeking for the 100% hike, they equally wrote a letter countering the DisCos claims,” the source said.

The spokesperson of NERC, Mike Faloseyi, when contacted on Sunday, said he was not aware of the proposed hike but promised to get back to our reporter. When Daily Trust contacted him yesterday, he said he was in a meeting but would consult with the commission chairman and get back to us. But he never did.

Power firms justify tariff

Daily Trust observed that in an attempt to justify its proposed electricity hike, the umbrella body for DisCos, the Association of Nigerian Electricity Distributors (ANED) has been running advertisements in about 10 national dailies in the last five weeks highlighting “basic electricity facts the public must know.”

The publicity messages, ANED said, were meant to clarify the position of 11 power distribution companies in the power sector value chain.

Some of the paid publications carried messages such as: “Electricity is a commodity with a price that must be paid.”

“The average residential tariff of ₦24.12/kWh is still significantly cheaper than self-generated power at a cost estimated to be in excess of ₦50/kWh,” among others.

ANED on its website also said the DisCos had a five-year performance commitment to reduce power interruption, extend the distribution network, increase metering and improve the quality of customer service.

One other message by the association reads: “DisCo operators only collect 24 percent of the tariff revenues. The balance goes upstream to transmission, generation and other industry stakeholders (CBN, NERC, NBET, etc).”

The association said without a tariff that allowed the operators to recover their cost of operation, there would be no increased generation or improved service delivery.
On the recent vandalism, ANED in its most recent series of paid publicity said electricity customers should blame vandals and not the DisCos as “we cannot give what we do not have.”

MAN rejects fresh tariff

Manufacturers Association of Nigeria (MAN) confirmed to Daily Trust that it recently ‎wrote the NERC to express displeasure over moves to increase electricity tariff in the country.

Mr. Ogunmefun said the letter to NERC was a continuation of MAN’s opposition to intense lobbying by electricity distribution companies to increase electricity tariff without recourse to procedures and rules.

He wondered why the DisCos were so anxious to introduce a new tariff regime when the ongoing tariff would only lapse in 2017.

“We have an agreement with the electricity distribution companies on MYTO 2 which states that the current electricity tariff would terminate in 2017.

“We have consistently challenged the moves by the distribution companies to hike tariff for manufacturers outside the MYTO 2,” he said.

Ogunmefun said, “We filed a suit at the Federal High Court Lagos which has since given injunction stopping the electricity distribution companies from going ahead to tamper with the current electricity tariff.

“We will not relent in our opposition to the moves by power companies to increase electricity tariff outside the MYTO 2.”

He said the manufacturing sector alone contributed over 80 percent of the revenue of the power distribution companies as such there was no justification to stultify the sector with arbitrary tariff regime.

He said Nigeria was battling with infrastructure gaps and frustrating manufacturers with high electricity tariff would go a long way in killing ease of doing business in the country.
“To imagine an increase in electricity tariff with the already frustrating state of infrastructure in the country is a mortal blow on the manufacturing sector,” he said.
Civil society kicks

The Nigerian Electricity Consumers Advocacy Network (NECAN), a consumer group earlier initiated by NERC, has frowned on the planned increase while accusing the commission of complicity.

NECAN President, Tomi Akingbogun, told our reporter yesterday they confirmed the proposed increment with MAN and that they would take up the issue with the minister of power.

“We totally condemn it because it is dangerous for our economy at a point when the DisCos are not supplying any electricity,” he said.

He said any fresh increase “is quite dangerous for this economy because it is like inciting the people against the government; it means the people are being pushed to the wall.

“The economy is almost nearing a recession. The increment if done will be 200 percent in two years. We believe the minister will not approve such and for those who are having such thoughts including the owners of the DisCos, are they really in Nigeria?”
Akingbogun said “Even Ghana just complained of poor power supply because of the vandalism here in Nigeria. We are not having enough power now. This is the fourth time they will be asking for tariff rise. When they first asked for 100%, NERC gave them 50% and it happened the second time.

“NERC should have thrown their request out but it is better we don’t wait for NERC because they may not say anything to the advantage of the public. In the past, they aligned with the GenCos, that is why we, as the voice of the public, said this must not be done,” he said.

Consumers’ reaction

Individual electricity consumers across Abuja and environs also expressed their dismay over the new proposal. Mr Nwigwe Obi who runs a welding venture in Nyanya, Abuja said it would not work as Nigerians would resist such moves at all cost.
“We have not even gotten over that of February 1, 2016 when it rose to over 45%.

This time, government should know that everybody will rise up in protest because it is too much,” he said.

Malam Haliru Musa, a cold room operator in Mararaba, Nasarawa state said the DisCos should not think that way because the power supply situation has been bad in the past months.

“The DisCos won’t think of that because vandalism has crippled power and they have not supplied meters to customers. Nobody will pay if they attempt to even increase a little,” he said.

Mr Odoh Vincent, a resident of Lugbe, Abuja said “with the last increase, my estimated bill rose from an average ₦3,000 monthly to about ₦7,000. The DisCos promised to provide meters after the February increase but we have not seen any yet.”
DisCos response.

When contacted yesterday, the spokesperson of ANED, Barrister Sunday Oduntan said in a text message that it was not true. “No. That is not true. Call me later,” Oduntan said. He didn’t answer subsequent calls or respond to text messages sent to his mobile phone.