The Presidency and leadership of the National Assembly showed exemplary leadership when they intervened recently to halt the implementation of the new electricity tariff by the distribution companies (Discos). The planned electricity hike has been suspended until the first (Q1) of 2021. Without the timely intervention, a new tariff regime would have commenced effective July 1, 2020. The deferment of the new tariff regime was the outcome of a meeting attended by President Muhammadu Buhari, Vice President Yemi Osinbajo, the Senate President Ahmad Lawan and Speaker House of Representatives, Femi Gbajabiamila, and representatives of the power distribution companies.
After the meeting, all parties agreed to suspend the planned hike because of the ravaging Coronavirus pandemic and its attendant impact on the incomes of Nigerians.
We recall that early this year, the Nigerian Electricity Regulatory Commission (NERC) directed the 11 electricity distribution companies (Discos) to stop further collection of electricity bill under the estimated billing system. The regulatory agency placed limits on estimated bills that can be issued by Discos to unmetered customers. Consumers who have been inundated with estimated bills, whether they have electricity supply or not, thought this was good news, but the order was not strictly enforced by the relevant regulatory agencies.
Apart from meeting the metering needs of electricity consumers, there is urgent need to improve the power supply in the country. Many companies have either closed shop or relocated to neighbouring West African countries as a result of unstable power supply. Some companies run on generators and other sources of power supply, thereby increasing the cost of production. Currently, the national energy requirement is between 40,000MW and 60,000 MW, while generation is less than 5,000MW. The Discos should show more commitment to meeting the power supply needs rather than the constant plan to hike tariffs. The agreement by all the parties that the Federal Government should continue to subsidise the power sector by bearing the difference in the present tariff until further notice is welcome.
Government’s intervention to halt the tariff hike is commendable. However, the yearnings of electricity consumers in the country remain the same: a stable, quality and efficient power supply. Regrettably, that has not happened. The enthusiasm that heralded the unbundling of the Power Holding Company of Nigeria (PHCN) and the subsequent privatisation of the power generation companies (Gencos) and Discos has considerably waned.
Sadly, electricity consumers still experience unstable power supply, outrageous and indiscriminate bills. The result is that Nigerians are not enjoying regular electricity supply, while businesses are going down. The poor electricity supply has negatively affected the economy since power is the catalyst for economic development. The truth is that Nigerians are not opposed to any service reflective electricity tariff. What they want is steady electricity supply to all consumers. Discos are yet to provide prepaid meters for all consumers through the Meter Assets Programme (MAP). Until the Discos are able to do so, it will be difficult to convince Nigerians on any plan to implement a new service reflective electricity tariff. The Discos should be made to understand that profit consideration should not supersede good service delivery. Therefore, we urge the Discos to put necessary measures in place to ensure stable power supply. There are still many challenges hampering efficient power supply. It will be insensitive to go ahead with the implementation of the new service reflective electricity tariff without addressing these problems. The government should not leave Nigerians at the mercy of the Discos. It should continue to assist them to improve the power sector, bearing in mind that the performance of the economy is largely hinged on improved power supply.
The economy has already contracted by 3.2 per cent, and the World Bank and the International Monetary Fund (IMF) recently projected that Nigeria’s GDP would contract further to -5.2 per cent. The situation is worrisome. There is no country in the world where power supply is not subsidised by the central government, especially in developing economies like ours. We are aware that the Federal Government last year agreed in principle to fund the N546 billion tariff shortfalls through the Nigerian Bulk Electricity Trading Plc.
We urge the Discos to get the support of all stakeholders before contemplating any future tariff hike. Under the suspended new tariff regime, the Discos promise that it will ensure improved service delivery to customers based on customer class categorisation. This means that customers that enjoy higher supply availability will pay higher tariff based on their guaranteed hours of availability and service quality. All the same, we welcome the suspension of the tariff hike.