COMMERCIAL activities in many cities across the country were last Monday grounded following a wave of protests by Organised Labour over the hike in tariff by electricity distribution companies (DISCOS). With effect from February 1, electricity tariff was increased by over 45 percent. But leaders of the Nigerian Labour Congress (NLC), Trade Union Congress (TUC) and Civil Society Organisations, stormed various offices of the power firms nationwide, demanding for immediate reversal of the hike. For instance, in Abuja, the Federal Capital Territory, Lagos and some other cities, the protesters barricaded the offices of the firms, including the headquarters of the regulatory authority, the Nigerian Electricity Regulatory Commission (NERC), which authorised the hike, chasing away workers on duty.
According to the President of NLC, Comrade Ayuba Wabba, the tariff hike is “outrageous and unacceptable” to Nigerian workers who are already hard-hit by the harsh economic conditions in the country. Labour said the current increase is the fifth in four years, and is therefore, one hike too many. It threatened that the demonstrations would resume if the decision is not rescinded.
We recall that the issue of hike in electricity tariff has remained a contentious one for many years now, especially since the unbundling of the former Power Holding Company of Nigeria (PHCN) a few years ago and its sale to power Distribution Companies (DISCOS) and Generation Companies (GENCOS). The latest hike which resulted in the protests across the country is sequel to the request of the DISCOS for NERC approval of increase in tariff payable by electricity consumers in the country.
The DISCOS in the different zones in the country had in their proposals suggested between 49.4 and 60 percent increase for residential and commercial consumers, respectively. NERC, which was then under the leadership of Dr. Sam Amadi, approved 45 and 60 percent, respectively, for residential and commercial consumers. Various entreaties made by Organised Labour and other stakeholders for a downward review were not heeded, thereby culminating in last Monday’s protests. The controversial hike is also the subject of a court case that is yet to be resolved. The National Assembly has also waded into the matter. The legislators are still reviewing the positions of the stakeholders. Their position might be made public next week, according to the Majority Leader of the House of Representatives, Mr. Femi Gbajabiamila.
We understand the dilemma of both the consumers and the power distribution firms. Electricity consumers in the country have for years not seen significant improvement in power supply. Worse still, the performance of the DISCOS has not been encouraging. The initial optimism that heralded their emergence about three years ago has waned, as the little improvement noticed at the inception of the present administration has not been sustained.
Therefore, based on the perceived generally unsatisfactory power supply across the country, any increase in tariff is bound to generate protests. On the face of it, it seems to many consumers that the desire for more profit, rather than the quest to improve service delivery, is at the heart of the current hike.
However, it should not be discountenanced that electricity generation and distribution are expensive. And, for improvement and quality service delivery, consumers would, naturally, have to pay more. This is necessary to improve the funding of the sector and ensure a better performance. Nigerians need the power sector to perform optimally since power is central to any meaningful socio-economic development.
It is sad that the new power company owners inherited obsolete equipment that are incapable of carrying the current heavy demands of residential and commercial users. It has become necessary for all stakeholders – Labour, government, the DISCOS and GENCOS, to review the state and needs of the industry, and also consider the ability of consumers to pay the new tariff, with a view to reaching a common ground on the problem. Our advice is that they hold a stakeholders summit where this matter can be discussed and amicably resolved. This matter should not be politicized or allowed to degenerate into a crisis. Public protests or demonstrations are not the best way to resolve the issue.
Part of the way out is for the power distribution firms to, first and foremost, improve services to justify any hike. Better power supply could in due course encourage consumers to pay more.
In this regard, we need to remind NERC of the Memorandum of Understanding (MoU) it signed earlier with the DISCOS, to the effect that before any tariff would be approved, they (DISCOS) should fulfill certain conditions. One of such conditions is the availability of prepaid metres as spelt out in the Multi-Year Tariff Order (MYTO2). The DISCOS have done little in this regard.
The window is still open for all concerned to reach a consensus on how to resolve this matter, perhaps once and for all. This is because the Electric Power Sector Reform (EPSR) Act 2005 empowers any party aggrieved or dissatisfied by the decision of the regulatory authority in respect of tariff or any other issue, to appeal to it within a 60-day period, for further consultation. We urge both Labour and the power company owners to avail themselves of this window.
While this window remains open, the best solution will be a gradual increase in tariff so that consumers will not feel too much pain.
The importance of power supply cannot be over-emphasised. Its availability and stability will enhance the ease of doing business in Nigeria, and encourage further investments.