To be or not to be: NERC holds public hearing on electricity tariff hike, after TCN boss says it is inevitable

Less than a week after Mr Usman Mohammed, Managing Director, Transmission Company of Nigeria (TCN) said that consumers should be prepared to pay more for electricity in order to ensure regular power supply in the country, the Nigerian Electricity Regulatory Commission (NERC) appears ready to actually want to hear directly from Nigerians on the contentious issue.
Analysts say the public hearings across the country are meant to give a veneer of respectability to an already decided issue.
But in Lagos, electricity consumers on Monday opposed the planned tariff increment by Ikeja Electric (IE), demanding that 90 per cent of customers should be metered before any upward review of tariff.
The customers also slammed the Nigerian Electricity Regulatory Commission (NERC) for failing to protect the interest of Nigerians who are still subjected to exploitative estimated bills by the electricity Distribution Companies (Discos).
The News Agency of Nigeria (NAN) reports that they made their views known at the Extraordinary Tariff Review Stakeholders Consultation organised by IE in Ikeja.
The 50 per cent tariff increase, which is expected to begin from April 1, will raise the average tariff from the current level of N27.30 per kilowatt to N40.95 per kilowatt.
Speaking at the forum, Mr Sural Fadairo, National President, Energy Consumer Rights and Responsibilities Initiative, said IE should give priority to metering of all customers under its network instead of asking for a tariff review.
Fadairo said the Discos were not following NERC regulations in issuing their estimated bills, urging the regulatory agency to be alive to its responsibility.
Similarly, Mr Ayodele Olawoye, Chairman, Joint Action Committee, Electricity Distribution Companies Customer Rights, said the increment would only inflict more pains on Nigerians.
“We are going to resist this increment and we will go to court. 90 per cent of customers must be issued pre-paid meters before any talk of tariff increment,” he said.
On his part, Mr Adeola Samuel-Ilori, National Coordinator, All Electricity Consumers Protection Forum, said the increment was uncalled for based on various factors.
He said: “Firstly, it is not yet five years since the last Multi Year Tariff Order (MYTO) was implemented, which was in February 2016.
“Secondly, many consumers still buy transformers and line materials which are supposed to be purchased by the Distribution Companies (DisCos).
“The third ground is efficiency. Going by Section 76 (I) (2) of the Electric Power Sector Reform Act 2005, the law says each licensee must have solved the issue of efficiency and this has not been done.”
However, Mr Anthony Youdeowei, Chief Executive Officer, IE, said the consultation forum was one of the requirements by NERC before tariff review, noting that the proposed increment was aimed at achieving a cost reflective tariff.
Youdeowei explained that the tariff increment was not only for the Discos but for the electricity industry and for better service delivery by various levels of the value chain.
He said according to the proposed new tariff of N40. 95 per kilowatt, the disco will get 39 per cent, the Generation Company will get 49 per cent while the Transmission Company gets the remaining 12 per cent.
Youdeowei said the increment was justified because the last Multi Year Tariff Order (MYTO) was implemented in 2016 when the exchange rate was N198. 97 to a dollar which has moved up to N309. 97.
He said that inflation rate which was 8.8 per cent in 2016 had also gone up to 11.3 per cent, stressing that most of the equipment used for power distribution and maintenance were bought abroad.
On the Performance Improvement Plan of the company, he said IE was committed to metering all its customers by 2022 and reducing Aggregate Technical, Commercial and Collection (ATC&C) losses to 8.8 per cent by 2024.
Youdeowei said the company would invest in strategic areas that would guarantee reliable network, quality voltage, energy accounting, improve maintenance turn around time and enhance customer service experience.
Also, NERC Chairman, Prof. James Momoh, said engagement of customers was very critical before any tariff review, stressing that it was an opportunity for stakeholders to ask the Disco what it was willing to do for them.
Momoh, represented by Mr Friday Sule, Zonal Officer, North Central, NERC, said NERC would continue to ensure that all stakeholders adhere to the regulations guiding the operations in the power sector. (NAN)
Recall that early this year, NERC rolled out a list of new tariffs for consumers, but quickly said they were mere proposals following a backlash from consumers. The increases ranged from 59.7 per cent for consumers in Ikeja to 77.6 per cent in Enugu.
The Association of Nigeria Electricity Distributors (ANED) gave a thumbs up to the new rates and endorsed April 1 this year as commencement date.
It explained that the new tariffs would cater for revenue shortfalls in the sector.
Its spokesperson, Sunday Oduntan, in a statement said, “The Tariffs shall remain the same as they presently are (i.e. 2015 levels) until April 1, 2020 when there will be a slight increment to cater for tariff shortfalls which shall be gradually passed on to the consumer until this is fully completed by the end of 2021.
“In view of the foregoing, we state emphatically that there shall be no change or increase in the existing electricity tariff until April 1, 2020 when the new adjusted tariffs shall begin to gradually reflect the dynamism of our macro-economy.”
“NERC has just reviewed the MYTO 2015 and has published an order on tariffs and minimum remittance for January to June 2020. The tariffs anticipate changes in the currency exchange rates between the United States and Nigeria, changes in the rate of inflation and gas prices,” ANED stated.
The TCN boss last Friday in Lagos during the Groundbreaking for the Replacement of old wires on the Ikeja West-Alimosho-Ogba-Alausa-Ota Transmission Lines.
According to him, Nigerians have to be prepared to pay more for electricity because there is no relationship between poverty and payment of electricity.
“I want to tell the Nigerian public that we cannot move forward if we do not pay more for electricity.
“There is no relationship between poverty and payment for electricity.
“For the poor, give them electricity and a means of measurement and manage their cost.
“But if we don’t initiate a cost-reflective tariff system and the situation continues like this, public funds would continue to sink in the sector in futility,” Muhammed said.
The TCN boss also urged the government to stop subsidizing the power sector in order to move the sector forward.
“We have to be prepared to remove government in the middle, this issue of government guaranteeing everybody won’t work.
“The facts is that contracts are not effective and government cannot continue guaranteeing the Generation Companies (GENCOs) where it already sank over N1.5 trillion.
“The expenses can only be stopped when contracts become effective through cost-reflective tariffs.
“We have to stop this government intervention and we can only stop it when contracts become effective.
“Contracts can only be effective when you have cost-reflective tariffs.
“When contracts are effective, everybody is bound by certain agreements,” he said.
According to him, Nigeria has the cheapest electricity in West Africa and we can’t say we are the poorest.
“Even Burkina Faso is having collection efficiency of 98 per cent, despite their location within the sub-region, we, therefore, have to solve the problem of market issues,” said the TCN boss.
Mohammed said that the issue of load rejection by Discos could also be resolved once bilateral contracts were effective.
Speaking on the cable replacement project, the TCN boss said that the power transmission lines were built many years ago with limitations on the quantity of electricity they were carrying, making the upgrade inevitable.
“So, we are in the process of replacement of old wires on the Ikeja West-Alimosho-Ogba-Alausa-Ota transmission lines.
“Due to the current management quest of improving availability of electricity in the country, there have been series of transformer installations across the country, and there is need for a line that can supply power to all the transformers.
“This installation will increase the current capacity of this station to about two and a half capacity compared to the old capacity of 200mw.
“The line to be re-conducted has 664MW capacity of the transformer, and the current line has only 200MW of capacity, so the re-conducting would increase the capacity by 2.5 per cent which would upgrade it to 500MW.
“That means all transformers the line Ikeja West is covering between Abeokuta and Lagos will be energised.
“The project would improve power supply to residents under the Ikeja Electric network,” he said.
Mohammed said that the timeframe for the reconstruction of the line was six months, adding that re-conducting was also taking place at other locations such as the line from Alagbon transmission to Ikorodu down to Maryland, among others.
The TCN boss said that being the largest TCN Sub Station in Nigeria, there were likely to be outages along with the network connected to the transmission line.
Recall that early this year, an order signed jointly by the Chairman of the Commission, Joseph Momoh, and the Commissioner for Legal, License & Compliance, Dafe Akpeneye, titled “December 2019 MYTO Minor Review Order” for the 11 DISCOs, included various tariff reviews for all categories of consumers — except those consumers classified as residential (R1) — ranged from 59.7 per cent for consumers in Ikeja to 77.6 per cent in Enugu.
Under the new order, electricity consumers in Ikeja who used to pay about N13.34 per kWh since under the 2015 MYTO when the last review was carried out will from January 1 this year pay N21.80 per kWh, same as their R2 counterparts.
Their counterparts in Enugu who used to pay about N17.42 per kWh will, under the new order, pay about N30.93 kWh from January 1.
Their R2 and R3 counterparts who paid about N19.31 and N27.11 per kWh since 2015, will now be paying N34.28 and N48.12 per kWh.
Residential (R2) and R3 consumers in Ikeja, who have been paying N13.34 and N26.5 per kWh since 2015, will now be paying N21.30 and N21.80 per kWh.
Residential consumers are those categorised as those using singe phase and three-phase meters and electricity consumption of about 50 kWh in premises with flats exclusively for residential purposes.
The affected DISCos include Abuja Electricity Distribution Company, Benin Electricity Distribution Company, Enugu Electricity Distribution Company, Eko Electricity Distribution Company, Ibadan Electricity Distribution Company, Ikeja Electricity Distribution Company, Jos Electricity Distribution Company, Kaduna Electricity Distribution Company, Kano Electricity Distribution Company, Port Harcourt Electricity Distribution Company and Yola Electricity Distribution Company.
The order, the Commission said, supersedes “other orders issued on the subject matter, and shall take effect from January 1, 2020.”
The R3 consumers who use maximum demand low voltage who have been paying N26.5 per kWh in Ikeja will now be paying N36.49 per kWh, compared to their counterparts in Abuja who have been N27.20 per kWh since 2015, who will now be paying N47.09 per kWh, same as their R4 consumers.
The review also affected the tariffs for other categories of consumers, namely commercial, industrial and special.
Commercial consumers are those who use premises for any purpose other than exclusively as residence or as a factory for manufacturing goods.
The industrial consumers are customers who use their premises for manufacturing goods including welding and iron monger.
The special customers include those involved in agriculture (excluding agro-allied enterprises involved in processing), water boards, religious houses, government and teaching hospitals, government research institutes and educational establishments.
Under the new tariff order, commercial customers who have been paying between N20.45 and N27.20 per kWh since 2015 will now be paying between N37.39 and N47.09 per kWh.
Their industrial customers who have been paying between N20.95 and N27.22 per kWh in Abuja, will now be paying between N36.07 and N47.09 per kWh under the new dispensation.
Also, those in the special category who have been paying about N20.06 per kWh in Abuja since 2015, will now be paying about N35.74 per kWh.