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All you need to know about electricity tariff hike, as Nigerians react

All you need to know about electricity tariff hike, as Nigerians react

The Nigeria Labour Congress (NLC) and some civil society organisaions (CSOs) have kicked against the new hike in electricity tariff in the country.

They said all the reasons given by government officials on the increase were not tenable, saying even in advanced societies, citizens enjoy subsidies on some basic necessities like fuel and electricity.

The Nigerian Electricity Regulatory Commission (NERC) Wednesday announced a tariff increment from N68 kilowatt hour (kwh) to N225 kwh.

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The commission said the increment was made following consultations with the 11 electricity distribution companies (Discos) as well as the inability of the federal government to pay over N2.9 trillion that would accrue by the end of 2024 as electricity subsidy for failure to enable cost reflective tariff.

With this tariff hike, consumers under the Band A feeders and enjoying an average of 20 hours of power supply daily will pay about N135, 000 monthly.

Who’s affected?

At a press conference in Abuja, NERC’s Vice Chairman, Musiliu Oseni, said the increase would affect only 15 per cent of the 12 million electricity consumers.

He said the commission had downgraded some customers on the Band A to Band B and C due to the non-fulfilment of the required hours of electricity provided by the electricity distribution companies.

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Oseni said the review would not affect customers on the other bands, which vary from B to E.

He, however, said the increase of tariff for Band A customers would bring some incentives to ensure they would not be short-changed by the Discos.

“There are targets that have been provided for the distribution companies, which the commission will monitor and review from time to time to ensure the migration of other customers for better service.

“As part of the enforcement mechanism, the rate, which will be paid, which is N225 is just about three times the existing rate, requires the customers to get the service.

“We will be using technology to ensure that we get access directly to the distribution system and it will be gotten from the meters installed on the feeders.

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“Secondly, the order provides that the DisCos must publish the seven-day rolling average of services delivery on each of the feeders on their website,” he added.

Enforcement and monitoring

He said as part of the enforcement and monitoring mechanisms, each Disco had been mandated to set up a response team in locations of feeders that would be affected in the rate review.

“This is for the customers to have access to near real time response form the company. The discos have been urged to publish the contact of the head of the response team,” Oseni said.

He said failure to meet the service commitment for seven consecutive days, would make the feeder to be downgraded immediately to the service level the Disco is able to provide.

“The other provision is that where a DisCos failed to make the service commitment for two consecutive days, on the third day by 10 am, the DisCos must publish an explanation via bulk SMS to contact the affected customers on the feeder and provide explanation on why it is unable to provide the service required for two days.

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“It will also submit to the commission the explanation and update on the commitment to restore the service.”

He said when a DisCos failed to meet the service level for a month, it would downgrade the feeders and pay compensation to the customers.

Subsidy?

NERC’s Commissioner, Planning Research and Strategy, Yusuf Ali, said the impact of gas price and the unification of naira necessitated the review of the tariff.

He said in January this year alone, the electricity subsidy was N240 billion.

He said: “If we multiply that by 12 (months), it will lead to a subsidy margin of N2.9 trillion”.

“Now, the approved appropriation for Nigeria is N27 trillion, if we take N2.9 trillion out of that, it is way more than 10 per cent of the budget.

Insensitive and callous – NLC

The NLC described the new electricity tariff increment as insensitive and callous.

It said this would further impoverish the already pauperised Nigerians battling the hardship caused by the fuel subsidy removal.

The head of information at the NLC headquarters, Benson Upah, said the labour would take a position on the “chaotic” policy after appropriate organs of the movement meet.

“The government’s decision is not only insensitive, it is callous. It further pauperises consumers, especially workers whose wages are fixed and insufficient.

“It similarly makes the operating environment more hostile for manufacturers with potential for an astronomical rise in cost of goods and services or in the worst-case scenario, more closures and loss of jobs.

“The only people who stand to gain from this mindless social violence against the people are the World Bank and IMF. Pity! We will get back to you on that (next step) after the appropriate organs decide.”

Power theft imminent – Ex-NERC chairman

A former chairman of NERC, Sam Amadi, said the electricity tariff increase would cause power theft and corruption.

Speaking on Trust TV, Amadi said, “If you increase the tariff of power to the level that people can’t afford, it will increase the stealing of power through bypassing, corruption and at the end of the day, the utilities will lose more money.”

He admitted that there was a good reason to increase the tariff due to the forex crisis and the increase in the price of gas that will be sold to the electricity generation companies.

He, however, said the government should allow a special window where the distribution companies could access dollars at a preferential rate.

“If there is a way to help the DisCos and GenCos to operate well without suffocating the people much, they should do it.”

Reason for tariff hike – NERC

Musiliu Oseni, vice chairman of NERC said the commission hiked the tariff of electricity because generation companies could not pay for gas and maintain their machines.

Oseni stated this during an interview on Channels TV’s Politics Today on Wednesday.

Oseni said that if nothing is done to ensure tariffs are reviewed, the market can be relatively liquid.

He said, “If you look at section 116 sub section 2A of the electricity act, it mandates the commission to ensure that the licenses operating efficiency are allowed to recover sufficient revenue for the capital invested and for the operational cost as well as having a return on the investments they have made.

“In that case, it means that the onus is on the commission to ensure that operators actually earn sufficient revenue that we incentivize further investments in order to ensure improvement in service delivery.

“What informed the decision apart from the provision of the act, in December 2023, there was an improvement in the quality of service down to January. From then on there was dearth in electricity availability. Lack of review of tariffs caused that.

“The Discos could not be mandated to forward what they had not been allowed to charge. For that the payment to the generation companies has significantly dipped which affected their ability to maintain their machines and to pay for gas. And gas is one of the two significant raw materials for electricity generation in Nigeria.

“At a point it is clear that if nothing is done to ensure tariff is reviewed the market can be relatively liquid.”

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