Our Take On The Recent Hike In Electricity Tariff
The recent hike in electricity tariff as announced by the Nigerian Electricity Regulation Commission (NERC) has continued to generate serious conversation among Nigerians and we at Daylight Reporters thought it is imperative to join the conversation. NERC said the increase will affect only premium consumers classified as Band A. Under the new price regime, a Kilowatt of power which hitherto sold at N68 will now be sold for N225 ($0.15) per kilowatt-hour, representing a 300 percent hike.
First confusion that trailed that announcement arose from the darkness surrounding the so-called distribution of the stated Bands as consumers scrambled to identify which Band they belonged to. While this confusion was ongoing, the Abuja Electricity Distribution Company (AEDC) perhaps also having a problem with Band delineation immediately implemented the tariff increase across all Bands. Consumers under the Kaduna Electricity Distribution Company (KEDCO) also reported this blanket implementation of the tariff across all Bands, even as the Eko Distribution Company, trying to head off a possible fine came out to apologise to customers for implementing the new tariff across board.
NERC has since fined AEDC two hundred million Naira and ordered the company to refund customers who were dubiously over billed using power tokens. This confusion is just one of the many problems that this tariff increase is fraught with. Questions have been raised as to the reality of the so-called customer classification vis-à-vis NERC’s claims that customers on Band A have been enjoying 20 to 24 hours of power daily. This paper and many Nigerians have been wondering who and where this Band A currently services and for how long these customers have been enjoying this 20 – 24 hours of power.
Although NERC has ordered all DisCos to automatically downgrade any Band A feeder that does not enjoy the minimum requirement of 20 hours per day power supply for seven consecutive days, we doubt this directive is enforceable.
Already, this order which formed part of the Service Delivery Commitments for every DisCo in line with the Supplementary Order to the Multi-Year Tariff Order (MYTO) 2024, as released by NERC, with effect from April 3, 2024, looks more assumptive than feasible and the reason is simple. Nigerians don’t trust power companies that quickly implemented tariff increase for specific a Band across all Bands to be considerate to the point of automatically reclassifying their customers when power on a specific Band fall below the agreed supply threshold.
But assuming we agree without conceding that DisCos can be trusted, we are still left with the problem of the high cost. For once, sociocultural organisations, political leaders and just about all Nigerians are united in condemning this steep tariff hike. The economic argument is pretty straight forward, especially when mirrored against existing harsh realities, occasioned by two economic policies that have all but wiped out the middle class.
As prices of goods continue to soar despite the modest gains of the dollar against the Naira, there is no doubt that this tariff hike will signal another round of commodity price hikes in the market. This is because, manufacturers will face significantly increased cost of production as a result of this hike, an expenditure they will simply shift on to consumers already groaning under the weight of choking prices while still grappling with the reality of one of the lowest minimum wages in the world.
The suggestions by NERC that the new tariff will forestall constant grid collapses also comes off as a desperate attempt to hoodwink Nigerians into accepting the new tariff, especially with the minister hinting that the hike will soon affect every consumer. Nowhere in the new service agreement was it stated that customers will receive some form of compensation should the grid collapse despite the new rate, nor can NERC or anyone for that matter give that guarantee.
In any case, Nigerians have been burnt too many times and I wonder if anyone will buy that story. In the past, NERC has made so many bold pronouncements that never made it to the implementation stage. We are aware that so many power consumers right inside Abuja have not been metered through no fault of theirs. The AEDC uses this to deliver outrageous estimated bills to these consumers who are then intimidated with threats of disconnection should they fail to comply.
The issue of metering is particularly worrisome. It has been more than ten years since the partial privatisation of the electricity sub-sector, yet we are still being accosted with reports of how 7.1 million consumers are still without prepaid meters. One would have thought NERC will find a way around this contradiction first mooting tariff increase. Sadly, we are, as usual, putting the cart before the horse, increasing tariff for largely unmetered customers.
However one looks at it, it is disturbing that NERC felt comfortable conceptualising tariff increase when more than half of Nigeria’s registered consumers are on estimated billing. This is not only criminal, but also unacceptable and a painful reminder that the privatised vehicles that we have entrusted our electricity to lack the wherewithal to deliver on the mandates they were assigned, an indication that the exercise was fraudulent from the word go.
We at Daylight Reporters are standing with Nigerians against this insensitive tariff increase. We believe it is ill-timed, obnoxious, and an attempt to sink Nigerians deeper into the abyss of poverty. It is on this note that we call on the president to reconsider this increase until such a time perhaps that a vast majority of consumers have been metered and their financial capabilities significantly improved.
