This New Tariff Must Not Stand! - Simon Musa

When on Wednesday this week, the Nigerian Electricity Regulatory Commission (NERC) announced a 300% increase in electricity tariff for power consumers on Band A, not a few lamented that the coming days may be fraught with outrage. Yours sincerely, as some others did, decided to confirm which of the bands they were classified into. I was given 40.9 units for N10,000, instead of the 163 units that I was previously entitled. That means that I shall now require the sum of N80,000 (Eight Thousand Naira) to get the 326 units I was using per month.

The new tariff increase is only for consumers on Band A who enjoy 20–plus hour power supply. In reality, considering the woeful performance of the power sector since its privatisation in 2010, no area, including the Aso Presidential Villa, can be classified on Band A. I stand to be corrected. As soon as the announcement for the new increase was announced, the Abuja Electricity Distribution Company (AEDC) switched most of its customers to Band A. Curses rented the night as customers poured into online platforms for lamentation. Even my area, reputed for enjoying electricity supply for less than 10 hours a day, with many days of darkness, was classified Band A consumer.

The replacement of the behemoth National Electric Power Authority (NEPA) with Power Holding Company of Nigeria (PHCN) would later lead to the unbundling of the power sector into 24 power generation companies (GENCOs) and 11 distribution companies (DISCOs) in 2010. The major problem with the power sector is that powerful individuals, described as briefcase entrepreneurs, are simply using cronies to fleece the nation of funds. Without investments since taking over the power sector, these so-called power firms are only using local bank loans to run their show and declaring huge profits producing crippling pits of darkness.

Disrespect for rules

Over 10 years the unbundling, power outages and endless collapse of the national grid have defined a myriad of challenges incapacitating power generation and distribution. With the peak of power generation not exceeding 5,000 megawatts, nearly 40 percent of generated power is lost in the cobweb of transmission hitches due to obsolete equipment, among others. For a sector that is yet to deliver 30 percent of its potential, the newly reviewed tariff is seen as a deliberate ploy to fleece consumers of their hard-earned money.

The terrible state of inefficiency that the power sector now finds itself is not due to absence of rules, but premised on non-investment and disrespect for the rule of the game, thereby vitiating effective supervision and regulation. Unlike the Nigerian Communication Commission (NCC) that has turned around the fortunes of telecommunication in the country, the NERC has been enmeshed in whipping unwilling horses to the river.

Faced with power companies that have largely remained briefcase outfits, the regulatory sector for the power sector is rendered by the forces having strings with the owners of the company who are always in bed with power dealers and top politicians. NERC may be seen as free, but it is not totally free from the trappings of former government officials whose influence within the present political powerplay cannot be overestimated. That the government is still in complete charge of power transmission is reflective of the need to unbundle the Transmission Company of Nigeria (TCN) so as to eliminate bureaucratic bottlenecks and extricate the virus of inefficiency that is ingrained in power transmission.

Do it right

There can’t be appropriate pricing of energy without reviving the comatose power sector. GENCOs and DISCOs are more interested in making profits than improving their performance profile for uninterrupted power to consumers. The last 10 years since the privatisation of the power sector have seen companies understaffed and not committed to increased levels of efficiency. The recent increase in tariff amounts to rewarding power companies for their woeful performance since taking over the power sector. There’s no way this increased tariff can stand, considering the gross incapability by these power firms to provide uninterrupted power to customers.

It is commendable that the NERC yesterday imposed a N200 million fine on AEDC, following complaints over its wholesale classification of its customers as belonging to Band A. Such a fine should send a very clear signal that cheating DISCOs would no longer be tolerated. If the government is for the welfare of the people; then, this current administration, led by President Bola Ahmed Tinubu, should summarily rescind its decision on the new electricity tariff that is out to punish distraught electricity consumers. The fact is that Nigerians have been overstretched, and imposing further strangulating measures on them will not only threaten democracy, but may also lead to a public revolt against harsh policies that have reduced them into beggars who now depend on palliatives for survival.

The federal government must be wary of economic solutions prescribed by the Bretton Wood institutions. Still soaked in the flood of unrivalled economic hardship caused by the removal of oil subsidies, the President Tinubu-led administration should be reminded that even United and other European countries in 2022 provided its citizens with over $500 billion energy subsidies. Efforts must be geared towards extricating corruption from the provision of subsidies and not its realities and existence for cushioning hardship among citizens.