Africa-Press – Nigeria. <\/strong><\/span>President Bola Ahmed Tinubu kept mum as the recent 240 per cent electricity tariff hike worsens the suffering being faced by Nigerians.<\/p>\nThe recent electricity tariff increase for customers has birthed another page of hardship for Nigerians.<\/p>\n
While the residues of pain caused by the removal of subsidy and the Naira floating policies implemented by Tinubu\u2019s Government last year still lingers, the hike in electricity tariff for customers under Band A, getting at least 20 hours of power supply, has further unsettled Nigerians.<\/p>\n
In defence of the hike, the Minister of Power, Adebayo Adelabu, noted last Friday that 85 per cent of electricity will not be affected.<\/p>\n
He added that the Government would save N1.14 trillion in electricity subsidies.<\/p>\n
Despite Adelabu\u2019s position, the Nigeria Labour Congress, Trade Union Congress, Lagos Chambers of Commerce and Industry, and Abuja Chambers of Commerce and Industry have all openly condemned the new electricity tariff hike.<\/p>\n
They all agreed there is a cloud of confusion around the tariff implementation amid economic hardship.<\/p>\n
Upon the new tariff announcement by the Nigerian Electricity Regulatory Commission Tuesday last week, the eleven Discos began implementing the N255 kilowatt-hours rate for customers getting 20 hours.<\/p>\n
However, the implementation has attracted widespread dissatisfaction among electricity consumers.<\/p>\n
Abuja Electricity Distribution Company apologized to consumers for wrongly applying new tariff hikes on B, C, D, and E customers, who were categorized as getting 16 hours of power supply.<\/p>\n
Consequently, Abuja Disco was slammed with a fine of N200 million by NERC over the wrong billing of customers. The Commission also ordered the Disco to refund affected customers with energy tokens before 11 April, 2024.<\/p>\n
Fear of Arbitrary Billing<\/b><\/p>\n
Despite the sanction imposed on Discos, Nigerians are still apprehensive that all 12 million electricity consumers may bear the new tariff burden.<\/p>\n
The Federal Competition and Consumer Protection Commission, FCCPC, confirmed this when it asked the Government to order Discos to meter all Band A customers within 60 days.<\/p>\n
FCCPC also stated that consumers in Bands B, C, D, and E should not be migrated to Band A without being metered.<\/p>\n
According to NERC data, only 5.7 million electricity consumers are metered, while around 6.3 million are unmetered.<\/p>\n
The development further heightened the fears of arbitrary billing by Discos.<\/p>\n
Nigerians Paying for Darkness<\/b><\/p>\n
While the electricity hike subsisted, the power supply remained epileptic nationwide.<\/p>\n
National grid collapse, repairs by the Transmission Company of Nigeria and fire incidents have resulted in downtime.<\/p>\n
This year alone, the grid has collapsed three times.<\/p>\n
Electricity supply has dropped significantly since January due to gas constraints.<\/p>\n
Meanwhile, the latest gas price increase of 11 per cent has further worsened Nigeria\u2018s power sector challenges.<\/p>\n
This is why Kunle Olubiyo, the Nigerian Consumer Protection Network President, said Nigerians have continued to pay tariffs for darkness.<\/p>\n
The Senior Staff Association of Electricity and Allied Companies, in a statement by its National Secretary, Nnamdi Ajibo, called for a reversal of the electricity tariff hike.<\/p>\n
Band A electricity consumers<\/b><\/p>\n
According to a list compiled by NERC, the eleven Discos have 481 Band A feeders, which supply consumers with at least 20 hours of electricity.<\/p>\n
Meanwhile, electricity consumers under B, C, D, and E bands get 16 hours of power supply and below.<\/p>\n
However, the Trade Union Congress has said no Nigerian receives 20 hours of power supply.<\/p>\n
In contrast, the Association of Nigeria Electricity Distributors, ANED, insisted Nigerians receive 20 hours of power supply.<\/p>\n
To address the confusion, NERC told Discos to publish a list of all Band A customers and set up a link to provide customers with information on their respective bands.<\/p>\n
Experts React<\/b><\/p>\n
In an exclusive interview with DAILY POST, Wumi Iledare, Professor Emeritus in Energy Economics and Executive Director of Emmanuel Egbogah Foundation, said the electricity tariff hike and gas price increase seem skewed to optimize producer surplus rather than consumer surplus.<\/p>\n
He noted that there seems to be no penalty attached yet for Discos benefiting from the sudden rise in tariff but not delivering.<\/p>\n
\u201cNew tariff is perhaps based on the increase in the wellhead price for natural gas for power generation.<\/p>\n
\u201cHowever, we must agree that N68 per KWhr is a price ceiling significantly below the market clearing price. So there are shortages due to high electricity demand at low prices.<\/p>\n
\u201cN68 is also not anywhere close to the fair return price of an economic good with decreasing marginal cost and average cost curve. It\u2019s not even the socially optimal price of electricity either.<\/p>\n
\u201cSo NERC had to do something apolitical, which ought to have been done long before now, but for institutional capture and political expediency that has seemed to be good judgement for too long. So it is better late than never. I guess the commissioners have come to understand these facts better than before.<\/p>\n
\u201cOf course, the accuracy of the tariff is speculative because of the many unknowns. It is perhaps arrived at based on assumptions and facts within the context of the pricing model applied.<\/p>\n
\u201cAs more facts become available, the pricing model will be recalibrated in a self-adjusting manner. If what I am reading in the media is correct, there is a price discrimination application based on daily supply hours. Such a mechanism is not unusual in a segregated market structure in the power market.<\/p>\n
\u201cLooking at everything done so far within the last month in 2024 to spur up gas to power value chain, the presidential executive order 40, the increase in wellhead natural gas price by the Nigeria Petroleum Regulatory Authority, and discriminatory electricity tariff, the benefits seem to be skewed to optimize producer surplus than consumer surplus.<\/p>\n
\u201cFinally, regarding my take or endorsement, the biggest challenge with the implementation is how to properly distinguish the targeted class with the ability to pay and ensure 20+ hours of power supply to them.<\/p>\n
\u201cThere seems to be no penalty attached yet for Discos benefiting from the sudden rise in tariff but not delivering. The ability to implement price discrimination is doubtful\u201d, he said.<\/p>\n
Similarly, Chinedu Amah, the CEO of Spark Online, a power sector investment forum, said the hike will enable the Government to unlock more cash to invest in things that will yield collective growth.<\/p>\n
He noted that Nigeria does not necessarily have standard development for all citizens, stressing that it is difficult to define who is rich or poor by their place of residence.<\/p>\n
\u201cFirst of all, it is important to note that subsidy removal is a good move if it will enable the government to unlock more cash to invest in things that will yield collective growth.<\/p>\n
\u201cHowever, it is important to point out that we do not necessarily have standard development in all our cities; thus you cannot clearly define who is rich or poor in all cases by how they reside,\u201d he said.<\/p>\n
Meanwhile, an energy expert, Mr Eleojo Joseph, said the last one week had been hellish for Nigerians due to the electricity tariff hike.<\/p>\n
He queried that there was no proper demarcation of Bands A, B, C, and E before the new tariff hike.<\/p>\n
According to him, the hike will affect the country\u2019s economy in the long run.<\/p>\n
\u201cIt has been a week of complete anarchy, fraud and scam by the DISCOs on Nigerians, and the people are in total despair.<\/p>\n
\u201cHow did we arrive here? We arrived here because we do not have a competent regulatory authority, and the Government does not understand the importance of electricity generation and distribution.<\/p>\n
\u201cNERC has been sleeping for eight years or more, and the incompetence is showing all over the sector. But thank God they have woken up from their slumber and are making all sorts of mistakes.<\/p>\n
\u201cThe genesis of the problem is the lack of proper mechanism being put in place before the hike in price.<\/p>\n
\u201cIt seems there is no interface between the operators and the Regulator. Was there proper demarcation or ringing of Band A, B, C, etc., users, and was it tested before they hiked the price?<\/p>\n
\u201cWho are the technical experts of the DISCOs? Who are their software and billing teams? So many questions to ask, but there won\u2019t be answers.<\/p>\n
\u201cWhy on earth will DISCOs lie on actual verifiable events? 20 hours of electricity is measurable. The DISCOs should be ready for litigation because there will be plenty of such cases in our courts in the coming months.<\/p>\n
\u201cThe new sets of staff of the DISCOs are a fraudulent bunch who are only there to make money, and I foresee anarchy as most angry persons will take the law into their own hands and attack the DISCO staff on the field. We are headed to a dangerous state in Nigeria\u2019s power sector.<\/p>\n
\u201cThe economy is the ultimate loser in all of these things happening. More industries will relocate or close shops, unemployment will increase by the day and a more gloomy outlook for the country.<\/p>\n
\u201cGovernment should dedicate special attention and rate to the industrial sector and increase the take-home salary of workers in the private and public sector\u201d, he said.<\/p>\n
Similarly, Ewetumo A A, a retired staff of the defunct Power Holding Company of Nigeria PHCN, formerly the National Electric Power Authority, said most Nigerians believe that the new tariff will be implemented across the board in a matter of time.<\/p>\n
\u201cThe citizenry\u2019s reaction to the recently announced increase in Electricity Tariff is both baffling and bewildering.<\/p>\n
\u201cThe Nigerians believe it is just a matter of time before the tariff increase percolates down through the other Bands.<\/p>\n
\u201cProof of this was the enthusiasm with which AEDC, EKEDC and IBEDC applied the tariff increase to all their electricity customers irrespective of their Bands before the Regulator clamped down a N200 Million fine on AEDC.<\/p>\n
\u201cIt is true that the Federal Government has failed to honour its financial obligations to participants in the NESI, especially concerning payment for gas, GenCOs, and DisCOs.<\/p>\n
\u201cThese lapses on the part of the Federal Government have emboldened the DisCOs to root for higher tariffs to balance their books.<\/p>\n
\u201cUnfortunately, higher tariffs do not necessarily translate to better services because there are two other partners, TCN and the GenCOs, who do not receive commensurate receipts from the DisCOs as monthly energy remittances.<\/p>\n
\u201cTo improve power supply in Nigeria, a holistic approach must be implemented to address the several teething problems of the NESI.<\/p>\n
\u201cGas constraints: An overhaul of our Gas two Power Policy. Increased homegrown participation in producing, processing, and distributing gas for homes, industry, and power generation.<\/p>\n
\u201cPresently, we are importing gas to augment our local supplies, which depend on Forex availability and rate.<\/p>\n
\u201cTCN Bottlenecks: an overhaul of the transmission system entails more lines, reconductoring, upgrade of power transformers, and the building of new substations.<\/p>\n
\u201cDisCOs rickety networks: some DisCOs have not added a single SPAN of overhead lines to their network, not to mention building new injection substations. There is an acute need to refurbish, upgrade and expand the distribution networks.<\/p>\n
\u201cThe unending metering saga: There must be new regulations with severe sanctions for failure, flouting or by-passing the metering regulations.<\/p>\n
\u201cAll connections must be metered; presently unmetered consumers must be metered within three years,\u201d he stated.<\/p>\n
For More News And Analysis About Nigeria<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"By Ogaga Ariemu Africa-Press – Nigeria. President Bola Ahmed Tinubu kept mum as the recent 240 per cent electricity tariff hike worsens the suffering being faced by Nigerians. The recent electricity tariff increase for customers has birthed another page of hardship for Nigerians. While the residues of pain caused by the removal of subsidy and […]<\/p>\n","protected":false},"author":84,"featured_media":115402,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,1437,29,28,2660],"tags":[1570,2140,254,945],"class_list":["post-115403","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-files","category-head-lines","category-homepage-english","category-to-homepage","tag-africa-press","tag-africa-press-nigeria-2","tag-nigeria","tag-tinubu"],"yoast_head":"\n
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