•Current cost Is Heavy Burden Already—Consumers
• Discos Criticised For Not Adding Values Existing Infrastructure
As the electricity companies poised to effect yet another increase in the cost of electricity, the over-burdened consumers are already bemoaning the existing high cost of the commodity, protesting that another increase is a death nail on the income of many. They argue that the persistent increase has not been commensurate with power supply, as the operators have never added value to the infrastructure inherited from NEPA. Report by ROLAND OGBONNAYA, MOHAMMED SOSANYA, TOMI FALADE, and OYIN SOMORIN
Following the planned hike on the electricity tariff by the operators from September 1, 2021, Nigerians raised concern about the continuous increase in the cost of electricity across the country, which many said has increasingly become a burden.
Speaking with Saturday INDEPENDENT during the week, some consumers who are still on the estimated bill also expressed anger at the bill being given to them given by the operators while those on prepared meters describe the entire package as crazy fuelling their belief that the Discos unofficially increase the cost of electricity.
Mrs. Taiwo Lawal is a trader in the Ayobo area of Lagos State who deals in consumables said before now she was getting unjustifiable bills from Ikeja Electric until the officials recently advised her and others within the plaza where she does her business to get a prepaid meter as the was going to increase soon. We acquired the meters, but after a few months regretted it.
“This prepaid nonsense of a thing is not good at all. The only comfort I get is not paying high bills from IkejaDisco but if I think about it, is it not the same? We have all been forced to limit our usage of electricity, yet we buy cards like there is no tomorrow. How do they want the business to grow when they are the ones taking all our profits under the name of giving electricity?” she queried.
Mr. Ahanna Wilson who stays in Cemetery Road of the same Ayobo said was given a bill of N30,532 for his three-bedroom flat, he was able to pay N10,000 but his electricity cable was disconnected from the pole. “I don’t understand this country, how can they expect a civil servant who has not been paid to pay N30, 532 for a monthly usage when it comes to electricity. “I was angry, so I called the marketing manager and told him to come and collect the wire because I am not reconnecting anymore. I also told him not to bother to bring me a bill if they don’t want to see the other side of me,” he said.
ActionAid Nigeria during the week warned that the proposed hike in electricity tariff will further erode the purchasing power of Nigerian workers and deepen poverty in the country. The Country Director, Ene Obi, noted that many Nigerian electricity consumers have suffered the impact of the COVID-19 pandemic and inflation. “The increase is not only ill-timed but insensitive to the precarious plight of Nigerians whose lean disposable incomes are already decapitated.”
While noting that more than 100 million Nigerians live below the poverty line in the country, she urged NERC to compel all the actors in the electricity sector to ensure increased efficiency in the power sector to boost the country’s economy.
Among the electricity consumers who believe the Discos have unofficially been increasing the tariff is Tiwalade Martin-Ogunlesi, a resident of River Valley Estate at one of the border communities between Lagos and Ogun States. She told Saturday INDEPENDENT during the week that as of 2020, before COVID-19, her electricity bill, even with a prepaid meter, never exceeded N8000. My house is a room and parlour self-contained and before COVID. Usually, I just buy units worth N7000, and that is because in this estate, we get light 24 hours.
“Now, if I don’t buy units worth at least N25,000, then it means I won’t have power for some days. Even with this new amount, I manage my usage. I don’t use electric kettles, stoves, or anything that consumes power. I try to buy clothes that don’t require ironing so I don’t have to use my iron. My neighbours who stay in two or three bedrooms now spend as much as N50,000 on electricity. If the rate is increased again, I’m sure people would just prefer to stop using power altogether,” she explained.
An Ilorin-based Muslim cleric, who preferred to be called Yusuf, told Saturday INDEPENDENT: “The prepaid meters are creating problems for everyone. When we were using estimated billing, even if they bring a big bill, we can go to NEPA and renegotiate. But now, you can’t negotiate anything. I’m already spending almost 20,000 every month. Before now, if they bring a bill of N24,000 or N27,000. I have no choice but to pay upfront, and there is no cheaper alternative because even petrol is costly.”
Electricity consumers across the country are likely to pay more in the days ahead if the government gives the Discos a nod. This is based on details contained in a new tariff order issued by the Nigerian Electricity Regulatory Commission (NERC) to Electricity Distribution Companies (DisCos) and Electricity Generation Companies (GenCos), informing them of the approval to increase electricity tariffs. Those who are in the know within the sector confirmed the existence of the order.
If this happens against the public outcry over the burden the current tariff is having on them, it will be the third tariff increase in about a year with the first covering the period from January to June 2021, the second, July to August 2021, and the final which will soon be announced, September to December 2021. According to the information contained in the tariff orders for customers in Lagos, they will see their tariffs increase by about N2 across the board by September 1, 2021. Post-paid customers of the DisCos are expected to start paying this tariff in October after they receive their September bills. However, prepaid customers who buy energy in September will experience tariff increases immediately.
Dr. Rotimi Adesanya, an energy expert said that the tariff order reveals that high inflation rate, exchange rate, generation capacity, and gas prices are major factors considered in increasing electricity tariffs. Quoting the NERC, he said “the inflation rate used for January to May was 17.7% while they adopted 17.93% for the second half of the year. The inflation rate in Nigeria is currently 17.38%. The US Inflation rate was adjusted to 4.2% in the second half of the year from 3.1% between January and May. On the exchange rate, NERC reveals it used N405.14/$1 between January and May 2021 and has now adjusted it to N410 for the second half of the year.
“Generation capacity was adjusted to 5,267MW/h for September to December 2020 compared to 4,646 MW/h used for January- August 2021. This suggests NERC expects power consumption and availability to increase in the latter part of the year. Gas prices including the cost of transportation adopted were $2.98/MMBTU. Other factors used to justify the increases were capital expenditure requirements and operational expenses expectation of the DisCos.
According to an investigation, distribution companies increased tariff for the first time in about four years in September 2020 after years of protracted negotiations between DisCos and the government. The increase led to a threat by the Nigerian Labour Congress (NLC) to embark on a nationwide strike if the tariff increase was not rescinded. The Nigerian Government subsequently suspended the tariff increase in September, leading to the setting up of a committee between labour, government, and industry players.
While there is increased anger and agitation against the impending adjustment in electricity tariff in the land, some stakeholders are of the opinion that such action would turn out to be ephemeral after all. They said there was a need for Nigerians to pay attention to the Electric Power Sector Act 2005 with a view to re-evaluating the power sector in terms of regulation of the nation’s electricity industry.
Stakeholders and consumers are miffed over the increases because the operators—DisCos and GenCos have never added any value to the structures and infrastructure they met on the ground when the National Electric Power Authority (NEPA) was unbundled. They claim that the consumers still use the obsolete transformers and cables apparently bought or acquired by them, and still pay for cables and repairs of facilities when a fault is reported. “The operators are only interested in making money and nothing more,” a visibly angry Aderongbe Agbaje told our correspondent.
In the whole melee, the distribution companies who are expected to inform their customers of a tariff increase are yet to make any public pronouncement. The website of the industry regulator, NERC, where tariff orders for all DisCos are published does not have any copy of the new tariff orders and neither has it made any formal announcement.
However, a letter allegedly written by Eko Disco to its customers appeared to confirm the planned increase. However, a second letter signed by its CEO, denied any tariff increase was communicated advising customers to “disregard any such reports” not issued by its management, adding that it will inform its customers of any tariff increase. Some industry watchers told our correspondent that Eko DisCo s’ decision to keep mum maybe because they have to receive the go-ahead from the government to implement the tariffs.
Adetayo Adegbenle, Executive Director, PowerUp Nigeria, electricity consumer rights and power sector advocacy group, told Saturday INDEPENDENT that hike in electricity tariff was inevitable on account of the multi-year tariff order. “Even without NERC giving the go-ahead, stakeholders, and Nigerians, should expect a review. No agreement between Federal Government and Labour can supersede the regulatory provision of the MYTO (the Multiyear Tariff Order)
“I’ve said this before if Nigerians don’t want this Tariff Order, we should go back to the Electricity Power Sector Reform (EPSR) Act and change it, that’s for the National Assembly, not even NERC, or the Federal Government,” he said.