It is heartening that the Nigeria Electricity Regulatory Commission (NERC) has shelved its earlier plan to increase electricity tariff until July. NERC explained that the decision was informed by the spreading coronavirus pandemic, which led to the shutdown of economic activities across the country. That is commendable. As the pandemic has eroded the purchasing power of consumers, it makes sense to suspend indefinitely the planned electricity tariff hike until the pandemic is over and the economy is back on the path of growth. It will be unwise to contemplate any electricity tariff when Nigerians are still battling with the effects of COVID-19.
NERC had last December reviewed the Multi-Year Tariff Order (MYTO) 2015 and raised its tariff by 30 per cent. The tariff hike was supposed to take effect from April 1, 2020, but was later postponed to July to enable the agency negotiate and extract commitment from the Distribution Companies (DisCos) for service level improvement in line with the planned tariff hike. We believe that this is not the right time to come up with any price hike.
We say so, bearing in mind that any upward review in tariff at this point in time will worsen the misery of many Nigerians who are already grappling with daunting economic hardship. What is paramount now is how to mitigate the hardship the citizens are currently facing on account of the prevailing lockdown. Therefore, any tariff increase in this period is unacceptable. Already, many electricity consumers are not satisfied with the services of the Discos and the inability of the power companies to provide pre-paid meters.
Under the new proposed tariff order, residential customers in Abuja, categorised as R3, will pay N47.09 per kilowatt, up from the previous N27.20 kilowatt. This is almost 100 per cent price hike. In other parts of the country, residential customers will pay N36.92 per unit, as against the current N26.50 per unit of electricity. Also, industry customers, such as manufacturing and publishing companies in a place like Lagos will have tariff hike of over 30 per cent.
There are also challenges in the power sector value chain that the regulatory agency must frontally address. These include the issue of estimated billing, lack of stable power supply, unavailability of gas supply, among other challenges that continue to stymie businesses and economic development. For instance, the unavailability of gas has hindered the supply of over 4,000MW of electricity by the Transmission Company of Nigeria (TCN). Nigerians had thought that the emergence of the Discos would have by now reduced considerably the challenges in the power sector. Instead of abating, they are increasing on a daily basis. There is urgent need to change the narrative.
Not long ago, NERC directed the 11 electricity distribution companies (Discos) in the country to stop further collection of electricity bill under the estimated billing system. The regulatory agency also placed limits on estimated bills that can be issued by Discos to unmetered customers. Many Nigerians lauded the decision and hoped that things will improve. The Federal government directive took effect from February 20, 2020, and was given to all Discos. It repealed the Estimated Billing Methodology Regulations 2012 as a basis for computing the consumption of unmetered customers by the Discos. Unfortunately, the order has not been effectively implemented. If the order has been enforced, it would have changed, to some extent, the power sector value chain.
The Federal Government and other stakeholders should strive to meet the country’s power supply needs. Currently, the national energy requirement is between 40,000MW and 60,000 MW, while generation is less than 3,500MW. Discos, in particular, should show more commitment to meeting the power supply needs of consumers by upgrading their facilities before planning any hike electricity tariff. We believe that tariff hike can only be acceptable when there is stable electricity in the country.