NERC to abandon April 1 tariff hike implementation date

There are strong indications that the April 1, 2020, fixed for the implementation of the controversial hike in electricity tariff is no longer feasible because the industry regulator, the Nigerian Electricity Regulatory Commission (NERC) has extended the meter rollout exercise under the Meter Asset Provider (MAP) scheme by two years.

LEADERSHIP learnt that NERC’s action followed its careful study of the antics of the Distribution Companies (DisCos), especially in frustrating the MAP programme.

Consequently, NERC directed that all households should be metered within two years.

This was disclosed in Lagos by NERC commissioner for Finance and Management Services, Mr. Nathan Rogers Shatti, at a public hearing on “Extraordinary Tariff Review Application” organised by Eko Distribution Company (EKEDC).

Shatti said that the regulator had placed a cap on estimated billing system by Discos, to ensure those unmetered consumers pay approximately what those on prepaid meters pay.

With this arrangement, Shatti said that consumers would no longer feel cheated because arbitrariness in distribution of bills by the DisCos had created a lot of concerns in the system. He said that NERC in its wisdom came up with the idea having listened to consumers’ complaints and the failure of the DisCos to meter the consumers.

The commissioner said that the DisCos were not left with option of metering consumers or billing them according to the laid down cap on the system. He dismissed the April 1, 2020, commencement of the new tariff regime, saying that as a government, discussions, arguments and concerns from ongoing consultations would be addressed before any increase would be endorsed.

He said: “We are still going round to listen to the people, so all these will be put in perspective. If we don’t want stakeholders’ input, we will just go ahead to do that but so long as we believe in collective governance, every point raised will be considered before any decision is taken.”

Also, the Federal Competition and Consumer Protection Commission (FCCPC) has urged NERC to consider the plight of electricity consumers in the proposed review of electricity tariff.

The commission’s executive vice chairman and chief executive officer, Mr. Babatunde Irukera, made the plea at the public hearing.

Shatti, who was chairman of the public hearing panel, promised that the team would look into all the issues raised by Eko Disco and the consumers’ concerns for effective service delivery.

At the hearing, Eko Distribution Company defended the proposal for the upward review in electricity tariff.

Irukera said that the proposal for increment in tariff would not be appreciated by electricity customers due to epileptic power supply being experienced in the country.

He said that there was a need to ensure regular electricity supply to justify the value for money paid by customers if they were to embrace the tariff hike. According to him, the real thing is not what consumers are willing to pay, but they need to understand that an equilibrium level should be achieved.

Irukera explained that the equilibrium level exists only when the effective power supply exists, and that makes customers willing to pay for the services they enjoyed. The CEO said that the DisCos would have to address the issues of metering and estimated billing which are the major concerns to the customers instead of only addressing its low revenue generation.

He cautioned the DisCos against the belief that constant power supply would only be available when the tariff was increased. “We all agree that efficiency will continue to be a problem and so, the position we have taken so far is that what industries seek to do is to transfer the government subsidy to consumer subsidies.

“There are three main reasons that the Discos, particularly Eko Distribution Company had repeatedly articulated as some of the problems in the industry. “One is that they are unable to remit the full revenue they are collecting on behalf of everybody in the industry; they are unable to remit it to NBET.

“One, low tariff; two, energy theft, and three, metering. And it seems to me that the broad presentation that we have heard today addresses only one, which is a low tariff. If you are going to promote efficiency, the only way to promote it certainly cannot be by increasing tariffs,” Irukera insisited.

According to him, there is absolutely no question about the fact that increasing tariff will not in itself necessarily promote efficiency. The CEO further said that there was no moral justification for the DisCos to embark on estimated billing.

He, therefore, called on NERC to institute a framework to see that electricity consumers were protected in the whole process.

Also, some electricity consumers, who were present at the event, rejected the proposed tariff increase, saying that efficient service delivery and improved power supply should be met first.

Earlier, Eko Disco, through its head of Power Procurement Regulation, Mr Nosa Igbinedion, requested for an increase in electricity tariff from the current N28.28kwh to N42.41kwh.

 

Source: Leadership

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