From Isaac Anumihe, Abuja, Adewale Sanyaolu and Merit Ibe
Stakeholders in the electricity industry have flayed the recent increase in electricity tariff, saying NERC remains a toothless bull that cannot regulate entities with 40 per cent Federal Government equity.
They argued that since the privatisation moratorium will expire this year, government should not renew the privatisation programme in its original format.
Speaking to Daily Sun, president, Electricity Consumer Protection Network, Kunle Olubiyo, said that NERC is a rubber stamp of the Federal Government. It only approves what is given to it be government.
“We are of the opinion that tariff is restricted to band A. Fundamentally, we see the whole gamut of privatisation as a shenanigan. It’s a misalignment. It’s the right step in the wrong direction. Looking at it on a broader scale, we feel that the moratorium for the power sector privatisation will expire in November. Our own take is that the privatisation itself is well intended but wrongly implemented. So, moving forward, since the exercise of the power sector expires this year, the government should not renew it in its original format, but should review the whole gamut of privatisation without going into litigation. Without litigation the DisCos franchise is broken. For example, the Benin DisCo and all the DisCos are biting more than they can chew. It has not in any form enhanced competitive electricity market.
“NERC does what’s called copy and paste. The presidency designs programmes. They take decisions and they just give NERC. Even the takeover of DisCos they just give NERC and NERC signs hook, line and sinker. It’s a toothless bull. NERC is helpless. We sympathise with NERC. NERC as a public sector finance institution cannot regulate entities that have 40 per cent equity of the Federal Government.
For the Vice President, Ashipa Electric, Folu Alabi, although the increase is long overdue, the ripple effect will be harsh at this time. It will bring hardship, increase in cost of doing business and add to the cost of production.
“The tariff initially was very unrealistic. But if your tariff is not commensurate with your Return on Investment (ROI), at the end of the day, there’s no way you will scale up. This tariff increase is long overdue. However, there’s always a ripple effect on the consumer. It’s going to affect a lot of things. For example, for commercial customers, it will increase the cost of their products so as to balance the commercial side of their business.
Eventually, the ripple effect is going to come to the common man because the cost of business will increase.”
Also speaking, the President, South East Consumer Protection Network, Goodluck Ibem, agreed that the increase will affect the cost of business and end-users are going to pay for it.
According to him, it will increase the cost of foods in the market.
It will affect the industries because if there’s hike in tariff definitely the producers or the entrepreneurs will add the cost of production on the goods they are producing. Ultimately, the consumers pay for it. End-users are those that are at the receiving end of the increases in tariff. It’s really worrisome.
Commenting on the latest hike, President, Electricity Consumers Advocacy Forum, Festus Adiele, said DisCos and NERC have connived to inflict further pains on Nigerians.
He said a situation where Discos secretly increase tariff without informing consumers was unacceptable.
He lamented that NERC that was meant to be in-between the consumer and Discos seems to have abdicated its responsibility, leaving the consumers in the cold.
For his part, President, Consumer Rights Advancement Organisation (CRADO), Adeolu Ogunbanjo, said NERC is neither here nor there on development.
He said he has heard complaints in certain quarters, alleging the secret increase in electricity tariff, adding that the inability of NERC to confirm the story makes the whole claims difficult.
He said electricity consumers within the Ikeja Electric network under Band B tariff class were still vending at the same rate of 20.2units for N1,000 worth of electricity.
Meanwhile, Manufacturers Association of Nigeria (MAN) said the hike in electricity tariff will increase manufacturers enormous spending cost of self generated electricity.
“This necessitated the association’s keen interest in all electricity related discourse and development, particularly electricity supply and tariff.
“The manufacturing sector employs over five million workers, directly and indirectly with 8.93 per cent contribution to Gross Domestic Product.
The sector also dominates export trade in the West African region, generates foreign exchange, contributes substantially to revenue of government and human capital development in Nigeria.
“It is, therefore, imperative that the performance of sector is enhanced through a pro-manufacturing policy that will encourage scale and lower unit cost of production rather that throwing fiery darts that will worsen its performance.”
The electricity bill payable by consumers, including manufacturers, especially for the unmetered customers will increase, thereby leading to significant increase in the energy cost to manufacturers as the usual hours of electricity outages will still prevail and manufacturers spend billions of naira on alternate energy to meet electricity requirements.
The hike will lead to decrease in foreign exchange earnings from the sector as high cost of production feeds into export commodity prices: reduce government’s tax revenue occasioned by drop in sales, as a lesser quantum of disposable income will be available to purchase manufactured goods and reduce capacity utilisation, further decline in GDP, large scale unemployment across the 76 manufacturing sub-sectors and possible increase in crime rate;
“It will trigger reverse-multiplier effect as cost of production escalates and the headways already made in the sector is eroded. This is because most of MAN-member companies are classified in the ‘D’” categorisation (D1, D2 and D3) where tariff is the highest.
Efforts to speak with NERC General Manager, Corporate Affairs, Usman Arabi, proved abortive as he did not pick his call nor returned any.