PROPONENTS OF PRIVATISING Nigeria’s years long, troubled energy sector, had insisted that some degree of autonomy in the sector would improve power generation and supply in the country. Moving from NEPA, acronym for National Electric Power Authority, to PHCN, Power Holding Company of Nigeria, former president Goodluck Jonathan, in September 2013, commenced government divesting from the energy sector.
With government divestment, PHCN ceased to exist. Nigerian Electricity Regulatory Commission, NERC, came into existence. PHCN was unbundled into 11 entities known as Electricity Distribution Companies, DISCOs; six Generating Companies, GENCOs; and one Transmission Company. Each DISCO was responsible for handling electricity distribution in each state or region.
The Electric Power Sector Reform Act, 2005, tasked Nigerian Electricity Regulatory Commission, NERC with monitoring and regulating the industry. It would strictly ensure that players in the industry comply with the market rules and operating guidelines in the energy sector.
More than five years of full privatisation of the power sector, Nigeria continued to be in darkness and in search of light. Average Nigerians do not understand the present structure of the energy sector – DISCOs, GENCOs, and others. Nigerians know, only, NEPA, which they translate as “Never Expect Power Always”. NEPA, to the public means “incompetence, agent of darkness”. NEPA officials are hated and despised by the public.
Like NEPA, Nigerians have refused to accept the reasons DISCOs, GENCOs and the regulating agency, Nigerian Electricity Regulatory Commission, NERC, advance for the failure to provide their homes and businesses regular power supply. While DISCOs are efficient in disconnecting lights from households and businesses, the public wonder while there is no corresponding efficiency in providing lights.
Public hostility on DISCOs staff has continued, as in the era of NEPA. Most vexatious to the public, presently, is the Estimated Billing System by DISCOs. There is public outcry over what has been described as “fraud, extortion and fleecing” electricity consumers by DISCOs, using the instrument of Estimated Billing, instead of providing the consumers meters.
While the public reel in disappointments and anguish due to inadequate power supply by DISCOs, to their homes, and especially, to their businesses – the small and medium enterprises, SMEs, the electricity regulating agency and the DISCOs were considering passing on to consumers over 40 per cent tariffs hike.
Nigerians, on Saturday, January 4, woke up to shocking surprise, at the website of NERC, that new minor review of the Multi-Year Tariff Order, MYTO, 2015; and the Minimum Remittance Order, MRO, for 2020; has been placed on the websit, indicating that electricity tariffs have been increased. With a likely commencement date of April, 2020.
IN A FORCED DENIAL of what it published in its website, NERC said the tariffs review was routine. That no immediate official electricity tariffs increase has taken place. James Momoh, Chairman, Nigerian Electricity Regulatory Commission, NERC, speaking with journalists, on Monday, in Abuja, said the commission was working to ensure that electricity distribution companies, DISCOs, provide meters to consumers.
Momoh said new regulation to enforce metering of electricity consumers would be ready in February, 2020. The move is to stop DISCOs from fleecing customers through the present Estimated Billing regime. “Failure to do so, we have a backup plan, which is one of our regulations that will be out in about a month, called ‘Clapping’ which is going to put a maximum amount DISCOs can charge customers.
“For DISCOs, it will be an advantage for them to provide meters as this is an attempt to make sure that the win-win customers are metered. We want DISCOs to provide them with meters because the minimum we are going to allow them to charge is not going to be to their advantage in the long run,” Momoh said.
Public outcry and disgust by consumers and stakeholders, greeted NERC proposed tariffs increase, as unacceptable because it would trigger inflation, worsen poverty and affect other economic indexes. Momoh, however, insisted: “There is no immediate increase in tariff for customers. As a regulator, we have been mandated to review the proposed tariff twice a year. We did the first one around June and we have no other option, but to do our job.
“We have done the review and it is subject to public consultation. In the next three months, the commission will be going from place to place to engage stakeholders for consultation. The other is a communication of what we have done to increase or reduce tariff. If at the end of our meetings, we decide that there will be no increase, it will be so. If there will be increase, it will be based on our engagement at the public forums,” Momoh clarified.
DISCOs, ON MONDAY, responded, by stating that the new electricity tariffs would be enforced by April, 2020. Association of Nigerian Electricity Distributors, ANED, speaking for the DISCOs, explained that the new tariffs by Nigerian Electricity Regulatory Commission, NERC, would cater for revenue shortfalls in the sector.
Sunday Oduntan, spokesperson of ANED, through tariffs review clarification notice, on behalf of the DISCOs, stated that tariffs would remain as they have been. But would change from April 2020. “The Tariffs shall remain the same as they presently are (i.e. 2015 levels) until April 1, 2020, when there will be a slight increment to cater for tariff shortfalls which shall be gradually passed on to the consumer until this is fully completed by the end of 2021.
“In view of the foregoing, we state emphatically that there shall be no change or increase in the existing electricity tariff until April 1 when the new adjusted tariffs shall begin to gradually reflect the dynamism of our macro-economy,” Oduntan, further stated.
DISCOs have continued to run out of answers to how to provide efficient and increased power supply to homes and businesses of Nigerians. But never runs out of reasons to increases tariffs. DISCOs Estimated Billing regime has put deep holes in the pockets of electricity consumers in Nigeria. It is quite revealing and relieving to Nigerians that the electricity regulating agency, plans to regulate estimated billing in a way that will benefit the DISCOs and consumers.
“Tariff increase should not be used as a means to transfer the inefficiency in the system to electricity consumers. What is NERC doing about getting meters to all willing consumers? What about consumers’ enumeration, to enable the regulator derive the appropriate denominator used in estimating the MYTO? What about the high transmission and distribution losses that are now being loaded on to the consumers?
“If these and other problems are not quickly addressed, high tariffs would simply perpetuate monopoly of inefficiency, payment evasion by consumers and continued high economic losses. We must confront the sector’s problems in a holistic manner. Piece meal approach is not sufficient,” Adeola Adenikinju, Director, Centre for Petroleum, Energy Economics and Law, CPEEL, University of Ibadan, stated, while commending on the proposed tariff increase.