Electricity consumers have rejected a proposed tariff hike, saying the move is Illegal and unjustifiable. ADEOLA YUSUF, who examines progress on the extra ordinary tariff review, wonders whether the consumers’ protest would count at the end of the day
Fresh adjustment in the electricity tariff in Nigeria is looming as the Nigerian Electricity Regulatory Commission (NERC) penultimate Monday declared plans for the Extraordinary Tariff Review process for the 11 electricity distribution companies (DisCos). NERC, which is the regulator of Nigeria’s power sector, disclosed this on Monday, April 26, 2021, in a notice to the general public and industry stakeholders posted on its website.
Protest from consumers
Electricity consumers in Nigeria, on Sunday, “outrightly rejected” plans by the Nigerian Electricity Regulatory Commission (NERC) to review electricity tariffs for the 11 DisCos, expected to lead to hike in the unit cost of power. Rising under two groups – the Energy Consumer Rights and Responsibilities Initiative (ECRRI) and All Electricity Consumers Protection Forum (AECPF) – the consumers kicked against the planned review, declaring it illegal and unjustifiable.
There was no justification for any upward review of electricity tariffs due to the current economic realities and challenges being faced by Nigerians, they said in separate chats on Sunday. NERC had, in a public notice, announced that it was working on concluding Extraordinary Tariff Review process for the DisCos.
The Commission said it would also commence the processes for the July 2021 Minor Review of the Multi-Year Tariff Order (MYTO-2020), which was done every six months.
However, National Coordinator, AECPF, Mr Adeola Samuel- Ilori, said minor review was not automatic, even if it was done every six months. Samuel-Ilori said: “There are provisions to be fulfilled before they can do any review, whether major or minor. “In the major review, they have to fulfill the provisions of Section 76(1) of the Electric Power Sector Reform Act (EPSRA), which states that a licensee can ask for a review premised on what the licensee has spent so far to improve supply.
“This also applies to minor review and we cannot say that supply has improved in the last few months based on the DisCos investments in the sector. “As at today, we are generating 5,866MW to serve the whole Nigeinflation deria, which is almost 200 million people.
That cannot be said to be an improvement,” he said. He also argued that there was nothing like extraordinary review in the EPSRA, stressing that what Nigerians needed now was improved supply not tariff increment. Also, Mr Surai Fadairo, National President, ECRRI, said Nigerians were still struggling to cope with the last tariff increment following the major review done in 2020.
Fadairo said “The national minimum wage is N30,000 and most states are yet to implement the payment. “There is rising inflation in costs of goods and services. Some Nigerians have lost their jobs due to the coronavirus pandemic and are barely holding on.
“There is no justification for any increment in electricity tariff at this point in time. We are even thinking of how government can give electricity credits to Nigerians to ameliorate their plights,” he said. NERC had said extraordinary tariff reviews were carried out in instances where industry parameters had changed from those used in the operating tariffs to such an extent that a review was urgently required to maintain the viability of the industry.
The Commission said the reviews would put into consideration changes in inflation, foreign exchange, gas prices and available generation capacity. NERC said it would also consider Capital Expenditure (CAPEX) required to evacuate and distribute the said available generation capacity in accordance with EPSRA and other extant industry rules.
Going ahead with review?
The review, the Commission said, was pursuant to the provisions of the Electric Power Sector Reform Act (EPSRA). According to NERC, extraordinary tariff reviews are carried out in instances where industry parameters have changed from those used in the operating tariffs to such an extent that a review is urgently required to maintain the viability of the industry.
The parameters, including the Nigeinflation rate, naira to dollar exchange rate among others have been on the increase in recent past and these indicate that the review would be done upward.
The Commission said it would also commence the processes for the July 2021 Minor Review of the Multi-Year Tariff Order (MYTO-2020), which is done every six months. NERC said the reviews would put into consideration changes in inflation, foreign exchange, gas prices and available generation capacity.
The Commission said it would also consider capital expenditure (CAPEX) required to evacuate and distribute the said available generation capacity in accordance with EPSRA and other extant industry rules. Further to the above, the Commission held series of public hearings and stakeholder consultations in the first quarter of 2020 on the Extraordinary Tariff Review Applications of the 11 DisCos to consider their respective five-year Performance Improvement Plans (PIPs).
NLC’s echoes from the past
The Nigerian Labour Congress (NLC) had earlier threatened fire and brimstone over the tariff hike earlier scheduled for September 2020. Ayuba Wabba, NLC chairman, said during a protest on September 1 that NERC is putting its name and the names of its officials in jeopardy with any hike in tariff. Checks by New Telegraph, however, showed that the tariff hike was implemented despite Wabba’s threat.
The NLC boss had earlier said: “It is important to put it on record that NERC will be putting its name on the wrong side of history if it continues to play the ostrich while a group of portfolio investors makes a blood meal of Nigerians. “Nigerian electricity consumers need NERC to speak up and act in the defense of the rights of the Nigerian people.”
He noted that adamant deria sire by the DIisCos was to ram through an ill-conceived agenda to further impoverish Nigerians amid plummeting return on service delivery. He said that the brazen decision was taken despite the fact that President Muhammadu Buhari and the National Assembly had ordered the DisCos to suspend the electricity tariff increase till further notice.
“It appears that the adamant desire of DisCos in Nigeria to ram through their ill-conceived agenda to further impoverish Nigerians through astronomical tariff increase amidst a plummeting return on service delivery has now been deregulated. “The DisCos appear to have given themselves the ignoble tasks of taking turns to taunt the will of the Nigerian people.
“This move is in spite of the resolution of the Senate of the Federal Republic of Nigeria and even the direct orders of Mr. President that the plans by DisCos to hike electricity tariff should be suspended until further notice. “We are not aware of any order by government or the elected representatives of the Nigerian people, de-freezing the order to suspend any plans to inflict more pocket and psychological trauma on Nigerians by way of reckless and insensitive hike in electricity tariff,” he said.
Wabba, however, noted that since the unbundling of the former Power Holding Company of Nigeria (PHCN) to yield the DisCos and GenCos electricity tariffs through the Multi-Year Tariff Order (MYTO) had been increased the number of times without accompanying improvement in services.
“This has also increased the burden on citizens for the procurement of equipment and facilities for public electricity supply amidst other devious methods by DisCos to cheat, exploit and despoil poor Nigerians,” he said.
Earlier shift on Implementation date
The Nigerian government had shifted the implementation of fresh electricity tariff hike for its citizens to the end of January 2021. Country’s Minister of Power, Mr Saleh Mamman, who stated this in a statement, maintained that he had directed the Nigerian Electricity Regulatory Commission (NERC) to inform all DISCOs to revert to tariffs that were applicable in Dec. 2020 pending the time.
Speaking through the statement by Mr Aaron Artimas, his Senior Special Adviser, Media and Communications, Mamman declared that the reversal to the old tariff was to promote a constructive conclusion of the dialogue with the Labour Centres (through the Joint Ad-Hoc Committee).
“I have directed NERC to inform all DisCos that they should revert to the tariffs that were applicable in December 2020 until the end of January 2021 when the FGN and Labour committee work will be concluded.
“This will allow for the outcome of all resolutions from the Committee to be implemented together,” he said. The minister spoke against the backdrop of the report that electricity tariff had been increased by 50 per cent. “I would like to affirm that these reports are inaccurate and false. It is unfortunate that these reports have led to confusion with the public.
“On the contrary, government continues to fully subsidise 55 per cent of on-grid consumers in bands D and E and maintain the lifeline tariff for the poor and underprivileged.
“Those citizens have experienced no changes to tariff rates from what they have paid historically, aside from the recent minor inflation and forex adjustment. Partial subsidies were also applied for bands
A, B and C in October 2020,” he said. Mamman said that these measures were all aimed at cushioning the effects of the pandemic while providing more targeted interventions for citizens.
He said that the public was aware that the Federal Government and the Labour Centres had been engaged in positive discussions about the electricity sector through a joint ad-hoc committee. He said that the committee was led by Mr Festus Keyamo, Minister of State for Labour and Employment and co-chaired by the Minister of State for Power, Mr Goddy Jedy-Agba.
According to him, progress has been made in these deliberations which are set to be concluded at the end of January.
“Some of the achievements of this deliberation with labour are the accelerated rollout of the National Mass Metering Plan and clamp downs on estimated billing. “Improved monitoring of the Service Based Tariff and the reduction in tariff rates for bands A to C in October 2020 (that were funded by a creative use of taxes),” he said.
The minister stated that it should be cleared that the regulator must be allowed to perform its function without undue interference. He said that the role of government was not to set tariffs, but to provide policy guidance and an enabling environment for the regulator to protect consumers and for investors to engage directly with consumers.
According to him, bi-annual minor reviews to adjust factors such as inflation are part of the process for a sustainable and investable Nigeria Electricity Supply Industry (NESI). He also stated that the regulator must be commended for implementing the subsisting regulations while putting in place extensive actions to minimise the adverse impact on end user tariffs.
“The administration is committed to creating a sustainable, growing and rules-based electricity market for the benefit of all Nigerians